CAMBRIDGE
UNIVERSITY PRESS
LONDON: BENTLEY HOUSE
NEW YORK, TORONTO, BOMBAY
CALCUTTA, madras: MACMILLAN
All rights reserved
STUDIES IN THE
NATIONAL INCOME
i924-‘938
Edited by
A. L. BOWLEY, So.D.
Emeritus Professor of Statistics in the
University of London
CAMBRIDGE
AT THE UNIVERSITY PRESS
1944
First Edition 1942
Reprinted with corrections 1944
PRINTED m GREAT ERTTAIN
Contents
Introduction page vii
Chapter 1 , The Definition of National
Income i
I. Introduction i
0. a. List of Books and Articles 2
2 b. List of Questions 3
2 c. Summary and Criticism of Answers 6
2 d. Answers of the Principal Authors 24
3 a. Official Estimates: Dominions and Foreign
Countries 32
3 b. Semi-official Estimates 36
3 c. Official Publications, United Kingdom 44
Chapter IL Some Constituents of the
National Income 54
1. Money Income, 1924 to 1938 54
2. Changes in Salaries in Great Britain, 1924 to
1939 84
3. Income from Agriculture 95
4. Numbers of Earners 10 1
Motes. Distribution of Incomes among Persons 1 13
Valuation of Stocks and Partly Finished
Goods 1 19
Chapter IIL The Census of Production 122
1. The Census Results 122
2. The Censuses of Production and Total Income 127
3. The Volume of Production 136
4. Index of Production, 1924 to 1938 15 1
VI
CONTENTS
Chapter IV. Price Movements: Index of Real
Income page i8o
Appendices to Chapter III
I. Sources of Statistics in Part i 157
II. Excise, Customs and Subsidies 165
III. Numbers Employed and Net Output of Small Firms 174
Bibliography 201
Index 250
For the reprint 1944 some score of typographical errors have been
corrected, of a kind that careful readers have been able to detect.
In addition three more important corrections have been made.
In Table IX, p. 81, line 10, Pensions, should have included
substantial sums for pensions to persons over 70, which since 1927
have been wholly provided by the State. The addition affects A. Total
but not B. Total.
The second paragraph on p. 187 was not useful as it stood and
has been replaced by a more thorough treatment.
The method employed at the bottom of p. 197 for estimating the
eifect of the ‘terms of trade’ did not allow for the reduction in
exports during the period. The re-working of the figures on a
revised basis has resulted in perceptible changes in line 4 of Tables
A and B, and minor changes in other lines and in some of the
numbers on pp. 191-3.
For the first of these corrections I am indebted to Mr T. Brown,
for the second and third to Mr J. L. Nicholson.
To the bibliography two pages have been added relating to recent
publications in the United Kingdom and the United States.
Introduction
In 1938 the National Institute of Economic and Social Research
delegated to a Committee of the London School of Economics
the task of reporting on the National Income of the United
Kingdom in any detail that should- be found possible. I was
appointed Director of the investigation with Mr H. S. Booker
as Secretary and principal investigator. It was intended to
make a comprehensive study of income as a whole and of its
distribution, together with examination of definitions and of
such special topics as depreciation. Owing to the outbreak of
war, several of the investigations were necessarily suspended.
The staff was transferred to other work and it became impossible
to obtain information other than that already published relating
to the period under consideration, namely 1924-38. Since
September 1939 the investigation has proceeded, but inter-
mittently as circumstances permitted. The Committee whose
task it was to superintend the undertaking was unable to give
more than a perfunctory attention to it. Consequently I have
had to carry on the direction of the work as time and circum-
stances permitted without the advantage of discussion. The
result is that the opinions expressed and the method followed
in this book are my responsibility alone.
Since the investigation has been thus curtailed and some
important aspects omitted altogether, the book is termed ^ Studies
in the National Income’. It may serve some useful purpose to
publish it in this incomplete form; at any rate there is no
prospect of making it more complete.
Though the whole is my responsibility, particular chapters
are mainly due to others. Thus the main table on earnings in
Chapter n is Mr Booker’s work, with slight modifications; also
the study of income for the years 1937 and 1938 in Chapter ii
was mainly prepared in consultation with Mr Campion.
Mr Campion and Miss Marley compiled the section on salaries.
The Chapter of definitions is the work of Dr M. J. Elsas, who took
over the bibliography prepared by Miss Dessauer. Chapter m
on the Census of Production is Dr A. Newman’s work so far as
the main tables and their explanation are concerned. The Index
was compiled by Miss B. Lawrence.
V. It will be seen from Chapter i that the concept of national
income is by no means simple. A questionnaire containing
queries with 36 sub-divisions was hypothetically addressed
Vlll
INTRODUCTION
to some dozen principal writers on the subject. A rough com-
putation suggests that the possible alternative definitions would
number over 200 milliards, i.e. more than half the number of
sixpences in the national income. The authors, however, were
not found to give explicit answers to very many of the questions.
It would have been an advantage to firame the estimates of
income in such a way that they could be matched with any
possible definition, but in fact only a limited number of variants
could be included. When decision is reached on definition there
still remains a complete lack of statistics on some classes, and
an element of approximation in nearly all classes. In the
treatment here followed an effort has been made to indicate
clearly the origin and nature of other factors involved and to
give some estimate of its precision. It will be clear that there
is no simple answer to the question: What constitutes national
income? and no precise answer to the question: How great is
the national income?
The treatment in Chapters 11 and m follows conventional
lines, but when in Chapter rv we come to the question of the
measurement of real. income new methods have been adopted.
Hitherto the custom has been to estimate money income over
a series of years and then adjust it by a series of index-numbers
of prices to obtain real income. In fact this process is only an
indirect way of forming an index of quantity, and in Chapter rv
the procedure is to estimate changes in quantity of the principal
classes and weighting them by their importance at fixed dates
to obtain the measurement of the change of the quantity of
goods and services available to the nation in successive years.
It is not possible to give any unique and consistent definition
of real income; we can only show the result of following selected
hypotheses. Apart from this there is a fundamental difficulty
which necessitates a considerable element of uncertainty in the
result. Half of the national income is received not in return for
physical products that can be measured objectively, but in
return for services for which in general there is no definite
measurement of change. Consequently one can only show the
result of particular hypotheses on the amount of services
rendered per week, for example, in transport, in teaching, in
clerical work, in administrative work, and incorporate it with
the estimate of physical production.
In some cases great detail of the statistics and working is
shown, while in odiers the treatment is summary. Where firesh
INTRODUCTION
IX
information was collected or unfamiliar methods were used, the
whole operations are exhibited, even if the effect on the main
totals was slight. But where the data were already published in
accessible reports, it was thought to be sufficient to give references
to the originals and to indicate only briefly the way they were
treated, especially if it was evident that variation of treatment
could not have any significant effect. There are, however, many
quantities for which there are no definite statistics — ^for example,
depreciation or the cost of transport or selling — here rough
approximations are necessary and are a matter of judgment;
all that can be done is to show the results of various methods on
the final figures.
While this book was passing through the press, new informa-
tion was published about the distribution of Income among
income-tax payers, in the White Paper Cmd. 6347 (referred to
on pages 53, 121 below) and in a statement in the House of
Commons circa 23, 1942. The former was discussed in the
Bulletin of the London and Cambridge Economic Service,
April 1942, p. 32; it is intended to analyse the latter in the
Bulletin of the Institute of Statistics, Oxford, due August 29,
1942. If these reports had been available, the treatment on
pp. 115-17 below would have been modified and extended;
but it remains impossible to show the distribution of wage-
earners’ and other incomes under per annum, either per
head or per family, or in relation to sex or age.
30 July 1942
A. L. B.
Chapter I
THE DEFINITION OF NATIONAL INCOME
By Dr M. J. Elsas
1 . INTRODUCTIOJ^
This study tries to give a survey of the literature on national
income, or on parts of it. In the bibliography. Appendix,
pp. 201-247, anattemptis made to catalogue the different authors
in different countries. The arrangement provides for classifying
the books and articles according to the specific topics on national
income. Some of the authors have covered the whole field but
others have only dealt with some of the items which come under
the heading of national income.
This list of books and articles, substantial as it is, cannot be
considered complete, for the number of publications which in
, one way or another are related to national income is so great,
that their treatment would require a very great expenditure of
time, and be too extensive to include here.
Our next aim was to show the difference between the various
definitions of national income. Only if we are sine of the exact
definition which underlies a given estimate are we able to
full use of it.
No one of the estimates is based upon quite the same method
as any other, unless it is built up purposely on the method
. introduced by one of the leading authors on national income.
Xhe differences in method we try to sum up in a question list,
composed of 31 questions and 36 sub-questions, in all a total of
67 questions. The questions are naturally not all of the same
' importance; some are trifling compared with others. Some of
them, on the other hand, are of outstanding importance and so
relevant that an omission or insufficient de&ition of these
points would make an estimate valueless for the purpose of
comparison with others. For instance, an estimate should
answer the questions whether indirect taxation or depreciation
and the services rendered by unpaid domestic work are included
or not. : *
, ^he' relative import^ce of an item does, however, not always,
cf^espond with' the leo^thic^ space some authors have devoted
-Some, modem atethf^-ha^ feofflaedmes dwseh on TmmrriR
v", Blit
2
THE DEFINITION OF NATIONAL INCOME
items whichj interesting though they ^may be, would not alter
an estimate to a great extent, whether included or not in the
total of national income; and sometimes it dooks as if the
definition of national income has become hairsplitting, and one
cannot help wondering whether this way of treating problems
has not infrequently taken more the form of a hobby.
Section 2 d contains the answers of the principal authors to
the questions. Besides th& estimates there are others either by
authorities or semi-officials or failing these often by private
statisticians; those estimates are dealt with in Sections 3a and i.
In Section 3^; we have given the answers deduced from British
official publications to the questions with which they implicitly
deal.
In Section 2 ^ we have tried to give an account of the differences
in the methods used. We have furthermore tried in a few instances
to clarify the problem or to give our own answer to some points
which it seemed to us have not yet been sufficiently treated.
2 a. LIST OF BOOKS AND ARTICLES
\
OF THE PRINCIPAL AUTHORS ON NATIONAL INCOME
A. L. Bowley. The Change in the Distribution of the National Income^
1880-1930, Oxford, 1920.
— ^ The Division^ of the Product of Industry. Oxford, 1919*
The Definition of National Income. Econ. Journ. March 1922.
■ Discussion to Stamp’s paper on ‘ Methods used in different
countries’.
Bowley and Stamp. The National Irwome^ 1924. Oxford, 1927,
Edwin GannAn. Wealth. 3rd ed. 1928.
Colin Clark. National Income and Outlay. London, 1937.
National Income^ 1924-1931. Cambridge, 1932.
W. H. Coates. The Citizen's Purse. Manchester Statistical Society.
Dec. 1931.
M. A. Copeland. Concepts of National Income. Studies in Income and
Wealth. National Bureau of Economic Research. Vol. i. New
York, 1937.
S. Fabricant. Capital Consumption and Adjustment. New York, 1938.
F. v. Fellner. Le revenu national de la Hongrie actuelle. Bull, de'
ITnst. Int de Stat. xiv, 3, p. 30.
I, Fisher. Der Einkommensbegriff im Lichte der Erfahrung. In
Die Wirtsckqftstheorie der Gegenwart. Ed, by H. Meyer. Wien, /
1928.
The Nature of Capital and Income. New York, 1912.
THE DEFINITION OF NATIONAL INCOME 3
A. W. Flux. Discussion on Stamp’s paper on ^Methods used in
different countries’.
C. Gini. La determinazione della Ricchezza e del Reddito deile
-Nazioni nel dopo Guerra e il loro confronto col periodo
prebellico. Bull, de Vlnst. Int. de Stat. 1931, xxv, 3, p. 358.
Di alcuni circostanze che nei tempi modemi tendono a fare
apprire I’incremento del reddito nazionale maggiore del vero.
Bull, de Vlnst. Int. de Stat. 1931-325 Tome xxvin, 2, p. 248.
J. R. Hicks. Value and Capital. London, 1939.
S. Kuznets. Changing Inventory Valuations in Studies in Income and
Wealth. National Bureau of Economic Research. VoL i. New
York, 1937.
Commodity Flow and Capital Formation. New York, 1938.
National Income and Capital Formation, 1919-1935* New York,
1937. (See Addendum, p. 53 below.)
H. Leak. Discussion of Stamp’s paper on ‘ Methods used in different
countries’.
E. Lindahl. National Income of Sweden, 1861-1930. London, 1937.
Alfred Marshall, Principles of Economics. 8th ed. 1922.
Matolcsy-Varga. The National Income of Hungary, 1 924/ 2 5-1936/37.
London, 1938.
W. G, Mitchell and S. Kuznets. Current Problems in measurement
of national income. Bull, de ITnst. Int. de Stat. 1935, xxvni, 2,
p. 280..
K. Mori. Estimate of the National Wealth and Income of Japan
proper. Bull, de ITnst. Int. de Stat. 1931, xxv, 2, p. 179.
A. C. PiGOU. The Economics of Welfare. London, 1929.
Lord Stamp. British Incomes and Property. London, 1920.
Methods used in different Countries for Measuring National
Income. Journ. of the R. Stat. Soc. 1934, xcvn, p. 423, 541.
See also Bowley and Stamp.
U.S.A. Department of Commerce. National Income in the United
States, 1929-1935. Washington, 1936.
C. A. Verijn-Stuart. Volksvermogen und Volkseinkommen in den
Niederlanden, Bull, de ITnst. Int. de Stat. 1931, Tome xxv, 3, p. 457.
A. Wagner. Statistik des Volks- und Nationaleinkommens. Bull,
de ITnst. Int. de Stat. 1905, xiv, 3, 4, p. i.
2 b. LIST OF QUESTIONS
concerning the definition of national income
1 a. IsNationalIncom‘ethat producedwithin the area of the nation?
' b. Is National Income that accruing to Nationals (home produced
and from abroad) ?
c. Is National Income that consumed within the Area?
d. Is National Income that consumed by Nationals?
4 THE DEFINITION OF NATIONAL INCOME
2. Valuation of the Product subject to Taxation.
a. Axe Excise Duties included in the value of the product to
which they apply?
b. Are Import Duties included in the value of the product to
which they apply?
c. Axe rates on house property included in the value of the
product to which they apply?
3. Valuation of commodities, production of which is subsidized,
(a) at cost (including profits),
or (^) at selling price.
4. Valuation of commodities and semces provided freely by the
Government from the proceeds of taxation.
а. How is public education valued?
б. How are health services valued?
c. How are police services valued?
d. How are defence services valued ?
e. How are the services of tax collectors, customs and excise
officials valued?
/. How are the services of the clergy valued?
£, How are the services of State officials valued?
5. Is allowance made for changes in the value of stocks and shares
and other paper titles?
a. Is any distinction made for services which are rationed or
have the consumption controlled in ways other than by
prices?
6. Is a value added for the services of houses occupied by
owners?
7. Is a value added for the services of other durable consumers’
goods (not houses), e.g. furniture?
8. Is allowance made for the value of services rendered to oneself
or one’s family?
, (a) Domestic services rendered by wives.
(5) Produce of gardens and allotments.
(r) Produce of farms consumed by farmers’ families.
(d) Services rendered by oneself which could be done by
paid work.
9. Is allowance made for gifts
(a) from or to persons in other countries,
(b) between individuals within a country?
10 a. (i) Treatment of income from Government debt.
(ii) The case of war loans.
b. Treatment of income from pensions, payments to the un-
employed, etc.
(i) Contributory.
* (ii) Non-contributory.
(iii) Special cases of pensions.
THE DEFINITION OF NATIONAL INCOME
5
10 b, (iv) University teachers, etc.
(1) Is contribution out of salary or addition by employer
counted as income, as savings or omitted?
( 2 ) After employment: consumption of capital or income?
(v) Is income out of annuities counted as income, as savings
or omitted as consumption of capital?
11. Is any distinction made between Government expenditure from
direct and indirect taxation?
a. Government income from indirect taxation (local rates, health
insurance, etc.).
12. The valuation of income in kind for lodging, board and other
perquisites
(i) when in return for services rendered,
(ii) when charity,
13. Is any attempt made to value the net advantages of particular
“ employments?
14. Are increments or decrements in the money value of
{a) durable capital,
{b) materials,
(r) stocks of finished goods,
{d) goods in process of manufacture,
allowed for, when quality and physical condition remain
unchanged?
15. Are undistributed profits included?
16. Is allowance made for the destruction of irreplaceable com-
modities?
17. How are insurance losses by fire, wrecks, etc. and personal
injuries treated?
a. Insurance and saving.
1 8. Is any allowance made for different costs of living in different
parts of the country?
19. How are savings defined and valued?
The relation of income to expenditure and of these to
production.
20. The distinction between the production of capital and of
consumption goods. ■
2 1 . The distinction between the production of material goods and
of services rendered directly to consumers. ,
22. Is advertisement included as a cost or as an investment?
23. Treatment of depreciation of
{a) capital goods,
{b) materials,
(r) partly finished goods,
yt) finished goods.
6 THE DEFINITION OF NATIONAL INCOME
24. Is Government expenditure divided into expenditure on goods
and services and transfer expenditure and is the former
divided into services rendered to entrepreneurs and con-
sumers?
25. Treatment of incomes of societies and other corporate bodies.
26. Is any attempt made to sum up expenditure on particular
commodities to derive a figure for national income?
27. Totals arising from various sources.
Comparison of inventory and aggregate method.
28. Division of income among factors.
29. Division of income among persons.
30. Gross and net income.
31. Price changes.
Measurement of real income.
2c. SUMMARY AND CRITICISM OF ANSWERS
Although there is a vast literature about national income^ only
a few authors have dealt even with all the main problems of the
subject thoroughly. Among those we call the principal authors
are a few who have not cared to give a full definition of national
income, but have taken part in the discussion on papers on
national income read by principal authors. The main authors
do not all agree even on the chief points; it is. therefore obvious
that their estimates on national income are only comparable if
these differences are taken into consideration. Estimates on the
other hand may be based on similar definitions, but the data
for certain items may not have been available in a country and
the author had therefore to impute figures if he did not choose
to omit them altogether. Such a procedure only provides rough
estimates for national income.
Only a small number of authors, who rank according to our
definition amongst the principal authors, and even fewer authors
of less importance, have given an estimate of national income
which can be compared with other estimates without substantial
amendments or adjustments. Estimates for the same countries
but for different periods also need careful examination whether
comparison is permissible without corrections; it may be that
the definition of income has undergone relevant changes in the
meantime. This change may be due to different or changed
opinion on the inclusion or exclusion of an item. It may be that
data for an item, which could not be included before because
THE DEFINITION OF NATIONAL INCOME 7
the figures were not available, have in the meantime been
computed by the authorities. Comparison has of course also to
take into account the change in territory of a country as well as
a change in the number of inhabitants. Finally an item, thought
to be trifling in earlier periods, might have become an important
one in later periods (e.g. war loans and war pensions or old
age pensions) .
Had there been the same or similar method underlying the
various estimates of national^income in all countries concerned,
even then not all the estimates would be comparable without
corrections. In countries with different standards of living
various items are of quite different importance. That also
applies to the same countries for estimates of different periods,
if the standard of living has changed in the meantime to any
extent.
Furthermore, in countries with large external debts or
countries in which the profits of important industries or transport
undertakings are paid to foreigners, or at least non-residents,
the definition of national income must be different. Here the
Inyentory method has to be adjusted accordingly.
Finally, in a country like Soviet Russia a quite different
concept of national income is stpplied by the authorities. In
Russia the incomes derived from so-called unproductive occu-
pations are not included in the total national income ; therefore
professional services, although paid for, are excluded. Evidently
comparison of the national income of Russia with that of other
countries would necessarily be misleading.
As to real national income, comparisons between different
countries or different periods are beset with pitfalls. Besides,
no wholly satisfactory method has been applied to turn the
nominal value of national income into a real one.
In a recent book on economic progress we ^e told that the
ancient Greeks in Athens had been not worse off (at least those
who were free men) than the people of to-day. The statistical
data on which this statement is based are, however, neither
plentiful nor convincing. In a review {The Quarterly Journal of
Economics^ 1923) Professor Bowley wrote: 'Though there is every
reason that the facts should be known, whether they are
pleasing to us or not, it is inadvisable that very doubtful
estimates should be given currency, whether they make for
complacency or for discontent.’
8
THE DEFINITION OF NATIONAL INCOME
WHAT ARE THE CHIEF DIFFERENCES BETWEEN THE
DEFINITIONS OF NATIONAL INCOME?
I . Most of the principal authors adhere to the definition i
which Bowley-Stamp termed income accruing to residents.
Colin Clark deducts firom the total of national income 'income
belonging to foreigners’. Bowley-Stamp think it necessary to
add an estimate for the income of soldiers and sailors abroad.
Lindahl excludes services of foreign vessels in Swedish waters
from Swedish national income.
Bowley-Stamp {The National Income ^ 1924) give estimates for
different types of income.
Aggregate income ^ including war pensions, old age pensions,
and employers’ contribution to insurance funds.
Disposable income home and foreign, less inconje belonging
to foreigners.
Indimdual and corporate income; including undivided profits.
Earned and unearned income; ignoring foreign debt and
reparations.
Social income; that is, aggregate income minus transfers'
(transfers are pensions and national debt interest).
Taxable income; this equals total income arising within the
United Kingdom plus income from abroad.
2 a, Whereas practically all main authors include excise and
import duties, Fellner excludes them. Lindahl and Stamp both
exclude excise duties in a closed community. The authorities in
Germany include them also in official estimates but deduct cost
of service.
In Great Britain customs and excise duties amounted to
roughly 28 per cent of total net tax revenue in 1931-32, in
Canada to 25 per cent, in BHgium to 28 per cent. In the Irish*
Free State and in India customs and excise duties amounted
to 62 per cent of total net tax revenue in the same year, 1 931-32
2 c, Only Lindahl refers to rates on house property. He
points out that 'the agents of production employed in private
production processes should be calculated inclusive of all rates
and taxes paid but with a general deduction for the costs of the
State’ {National income of Sweden^ Vol. r, p. 19).
I Disposable in the sense that the income comes into the possession of
individuals or corporations in the United^ Kingdom, and can be disposed
in private or public expenditure or saved at their choice.
Tax Sysiems of the World, New York State Tax Commission, 5th ed, 1934.
THE DEFINITION OF NATIONAL INCOME 9
3. The literature about national income is not large as far
as subsidies are concerned. Some writers who deal with this
question are not certain how to treat it. Amongst the principal
authors Copeland excludes subsidies as a transfer payment^ so
does Lindahl and Matolcsy- Varga, the latter as far as the grain
certificate funds are concerned. The British Census of Pro-
duction excludes custom and excise duties from total net output
but includes subsidies (but see Chapter iv below).
4. Stamp includes Government services provided freely only
when they are met by direct or tax payments charged on industry
and reducing its profits, as it otherwise would be a problem of
duplication. Bowley leaves the question open.
Colin Clark includes all Government services provided freely
at cost price. He refers to Marshall and points out: ^Marshall
also seeks to exclude the services supply by public enterprise
(road, water supply, education, defence and the like) but
modern economists in every case now include the value of such
services in the national dividend.’ But Marshall spoke only of
public property. He wrote: ‘The benefit which he derives from
using his own personal goods or public property such as toll-
free bridges are not reckoned as parts of the national dividend
but are left to be accounted for separately’ {Principles of
Economics y p. 524). Clark’s reference to Marshall therefore seems
erroneous,
4 <2. Kuznets and Matolcsy- Varga think that public educa-
tion eludes statistical approach. Lindahl includes it and gives
detailed computation., Colin Clark reckons it at cost price.
Fellner excludes the' services of State officials.
5. Only a few of the principal authors answer the question
whether allowance is made for changes in the value of stocks
and shares and other paper titles. Colin Clark excludes the
increase in value as part of national income, just as declining
value is not debited. On the other hand, the income authorities
in many countries are interested in this question. France,
Germany, U.S.A., Austria and Italy, most of them with some
reservation to lapse of time, take the increase of value into
account; whereas the United Kingdom does not, except in
death-duty assessment at current value. The tax authorities in
those countries which take this item into .account are not so
much interested in the logic of taxation as they are in the
efficiency in regard to the amount it yields.
lO THE DEFINITION OF NATIONAL INCOME
6 . The majority of the main authors include the value of
services of houses occupied by the owner, with the exception of
Fellner and most of the American authors. For instance, Irving
Fisher thinks it wise to exclude the services of dwellings just as
we exclude the service of a piano. Kuznets excludes owned
farmhouses. W, 1. King ( The National Income and its Purchasing
Power ^ igso) includes imputed rent of owned houses. The tax
authorities of U.S.A., Canada and New Zealand exclude owned
houses in their income estimates. German authorities include
them.
A house ranks amongst durable consumption goods as one
which is generally used for more than one generation; in that
it differs considerably from other durable consumption goods,,
which have a more limited period of existence. The inclusion
of this item seems therefore justified. On the other hand, where
the annual service of a house is very small and where the
habitation of the native should more suitably be termed a
hovel (as in India and Africa), in these cases one might be
justified in excluding the imputed value of its service, as this is
neither of great money value nor the service rendered for a
great length of time. *
7. There is much divergence of treatment in connection
with the exclusion or inclusion of services of durable goods other
than houses. Matolcsy- Varga considers this question negligible.
Amongst those who think it necessary to include it are Mori
(Japan), Lindahl, Irving Fisher and Verijn-Stuart. The last
named thinks that it makes no difference in money income
whether somebody furnishes a house himself or rents a furnished
house. Lindahl includes it or not according to the durability of
the goods. Fellner, Colin Clark and Pigou exclude the item and
so does Kuznets; Mitchell in collaboration with Kuznets are not
decided. They are doubtful about the services of furniture, cars
and clothing and they think no hard and fast rule can be
established.
None of the named authors in the various countries include
this item. W, I. ICing gives two alternatives, with and without
imputed income from durable consumers’ goods. He applies
an interest rate of 6 per cent of the market value of goods other
than houses. Lindahl takes as the value of the annual service
rendered 5 per cent of the value of durable consumers’ goods
other than houses. As the standard of living has been raised.
THE DEFINITION OF NATIONAL INCOME
II
and therefore the equipment of the homes as well as the number
of motor carsj the trend of the value of services rendered by
other durable goods’ has increased considerably in inter-war
years. ,
8. Practically all principal authors exclude services rendered
to oneself. Fellner thinks these services should be included and
so does Gini; no estimate, however, follows this advice.
8 <2. Domestic services rendered by wives are excluded by
Bowley, Stamp, Mitchell-Kuznets and Verijn-Stuart. Fellner
and Matolcsy- Varga include them. Gini thinks they should be
included. Lindahl includes women over 15 years of age, but
thinks excluding this item might be preferable. He gives
alternative estimates with and without unpaid domestic work.
The difference between these two estimates is rather substantial.
1921
National Income of
Sweden excluding
unpaid domestic work
Million kroner
7,296
National Income of
Sweden including
impaid domestic work
Million kroner
9,181
1922
6,459
8,0^
7.987
8,245
1923
6,482
1924
6,690
1925
6,916
1926
7,048
8,588
1927
7,210
8,760
1928
7,367
8>932
1929
7,862
9.447
1930
7,744
9.324
The first estimate, excluding unpaid domestic work, differs from
the estimate including it by about 25 per cent in the years
1921-25 and about 20 per cent in the years 1926-30.
' The total income from paid domestic work in Sweden amounts
to not much more than 10 per cent of the imputed income of
unpaid domestic work in Sweden.
In the Measurement of Social Fhenomena^ Bowley points out :
The only basis for valuing this (women’s household work) would
be to reckon the cost of having it done by paid help if the wife did
none of it ; but apart from the fact that much of it would be different — -
e.g. the difference between a mother’s and a nurse’s handling of
children — ^the valuation would not be reasonable, for the paid work
would not be directed in the same way to satisfy the most urgent
needs, nor fitted into odd times. I do not think that any general
attempt to value these services would result in valid measurementv
We may evade the difficulty, however, by using two methc^s of
reckoning simultaneously and applying that which is most suitable
12 THE DEFINITION OF NATIONAL INCOME
to any problem or classification in hand. One is to regard family
income of two parts — one measurable and the other composed of
incommensurable services ; so long as we are dealing only with a class
in which the practice of having servants or of not having servants
is universal, no difiiculty arises in comparison. The other method is
to subtract the expenses of domestic help; this applies where the
women go out to work, or work for gain at home, and in consequence
pay for such help,^ which they would otherwise not need. Then the
expenses of the help may be subtracted.
In ^The Definition of National Income’, Economic Journal^
1922, Bowley writea:
The ignoration of the value of women’s domestic services has been
less plausible in recent years. During the war the domestic staffs of
many houses decreased and well-to-do women rendered more
services to their own households. If the housemaid left and made
munitions and the housewife did her work, the total of goods and
services was increased by the value of the munitions, but part is cut
out of the reckoning because no longer paid for. If in 1 920 the former
servant helped in her own home, when her wages were no longer
needed, the total of services is still greater than in 1914 if her former
mistress is still doing the housemaid’s work, but since there is no pay-
ment to either income is decreased. Dr Dalton^ points out that
though services rendered within the households can be omitted for
some comparisons, yet in many measurements of the inequality of
incomes proportional differences are involved and therefore the com-
plete totals are needed.
In consequence of these and other ways in which elements of in-
come, w’'hich were ignored before the war as not affecting comparisons,
have become of some importance, I question whether Sir J. Stamp’s 3
dictum that ^the sum total of wages, salaries, profits and interest
presents a fairly comprehensible idea, free from important ambigui-
ties, for ordinary comparative purposes, is valid as between 1914 and
1921’.
Some authors have avoided taking sides in the discussion by
stating that the services of wives and other family dependants
are invaluable, and therefore have to be omitted. We cannot
help feelingThat such an answer is somewhat hypocritical; an
infinite value is not nought. There are better arguments why
this item could be excluded. True, a country, formerly pre-
dominantly agricultural, which has become an industrial one,
seems on account of the decrease in unpaid domestic work and
of the increase in paid jobs to have become richer than is really
1 If a servant is kept eidy because there are lodgers, her expenses should
be deducted from family income.
2 Inequality of Incomes^ 168.
3 British Incomes and Property y p. 416,
THE DEFINITION OF NATIONAL INCOME 13
the case. Many of those who formerly worked without pay are
working for pay now. However, the whole concept of national
income is based on the principle that only those goods and
services are to be taken into account which are bought and sold,
or can be exchanged for money, but on the other hand to omit
all those which. are not. We have to keep to this rule, otherwise
the definition of national income would become inconsistent.
Those who are not satisfied with this, as far as unpaid domestic
work is concerned, should remember that the exclusion of
unpaid domestic work and the inclusion of the same job, if paid,
is on the whole quite sound and logical, as the greater or smaller
number of paid jobs available in a country is in itself one of the
best yardsticks of national prosperity. Kitchen work, formerly
done by the housewife, but now taken over by the cook, is
usually proof of greater prosperity of the family.
The trade cycle manifests itself in the ups and downs of
the numbers of available jobs, and would become ‘meaningless
if this criterion was not considered. The change from unpaid
to paid work is by no means an illusionary increase of national
income, if such a change is the expression of an increase of
independence which is generally denied to those who have to
perform unpaid jobs. In normal times the change from unpaid
to paid work does not take place erratically. On the other hand,
Bowley quite rightly questions whether between the years
1914-20 this criterion was still as valid as before (‘ The Definition
of National Income’, Economic Journal^ 1922); The answer to this
is perhaps that rules and laws are often not applicable under
abnormal conditions. Even in physics some vital laws, gas laws
for instance, do not hold good in extreme cases.
Rao, in his estimate for The National Income of British India,
1940, deals with income of members of family workers in the
farnily concern. He includes services of * working dependants’.
Worldng dependants are defined as ' dependants following any
occupation which contributed to the family maintenance and,
not themselves receiving the wage or controlling the means of
subsistence gained’. The last class really corresponds to the
dependants engaged in — to borrow Mr Colin Clark’s phrase —
family occupations, arid presumably have an imputed income.
Rao assumes that the earnings of a working dependant, as also
the earnings of one who follows agriculture as a subsidiary
occupation, is one-third of that of one who follows it as his
principal occupation.
14 THE DEFINITION OF NATIONAL INCOME
8 b. It seems that the German tax authorities alone include
produce of gardens and allotments in national income.
Bowley {Measurement of Social Phenomena^ poi^its out:
Where vegetables, food, or flowers are grown in a garden or
allotment their value is income, but before reckoning it, the rent of
the ground (if that can be determined apart from the building) and
expense of seeds and tools should be subtracted ; in amateur gardening
it might easily happen that the remainder was negative, though
possibly balanced by the pleasure obtained in anticipation and the
health invigorated by cultivation. Practically the only important
cases are allotments and cottage gardens of the nature of allotments,
and in these cases estimates are not difficult to make correctly,
within, say, six pence per week.
8r. Farm products consumed by farmers' families are as a
rule included. Differences, however, exist as to how they are
valued. Colin Clark includes them at wholesale prices, Lindahl
at market prices, which one may assume are identical with
wholesale prices. The German official estimates also include
them at wholesale prices. King (U.S.A.) includes them at
average prices, a not quite clear definition. Poland and Eire^
include this item at retail prices.
This item is open to major error. Most likely in agricultural
countries, or countries with a large proportion of farming
population, we may expect in the value of this item the com-
paratively largest under-estimate of all items included.
Rao computes the produce of farms in India by the formula
(obtained by the Department of Agricultural Statistics of
India)
Standard yield x seasonal factor x area under cultivation.
Harvest prices are used for the purpose of valuation.
8 d. Services rendered by oneself which could be done by
paid work are generally excluded by the main authors. Lindahl,
who also excludes it, thinks it might be included if it could be
done at market price. Stamp considers services of mutuality by
co-operatives might be included. It is surprising that this item,
services rendered by oneself, is discussed at such length in the
literature, though in practice it is hardly of relevance. One
man may stop going to’ the barber and shave himself, but
another may just do the opposite. Besides, if he shaves himself
I According to Colin Clark, Oonditions of EcoTwmic Progress p. 31.
THE DEPINITION OF NATIONAL INCOME 15
he might spend nearly as much money for blades and other
tools (electric shaver). The problem is, though theoretically of
interest, comparatively trifling if it comes to putting it down
in figures; If we start to add the value of service by shaving
oneself, why not, if one wants to be consistent, add an imputed
value for the service done to oneself by dressing oneself without
the help of a valet, whom a certain number of people employ
for that purpose? Other services of similar nature could be cited
to show the absurdity of creating problems where there are
none.
9 <2. Nearly all principal authors include gifts from abroad.
Lindahl seems to include only gifts from emigrants to the U.S.A.
Copeland, however, excludes gifts.
9Z>. All authors seem to exclude gifts within the country, as
this is a transfer of income.
The tax authorities in Great Britain consider this item for
death duties, but only if a certain number of years has not
elapsed between the date of the gift and the benefactor’s death.
In Germany, on the other hand, all gifts are t^xed above a '
certain amount.
10 a. (i) (ii) The American authorities, Copeland, Coats and
Colin Clark include income from Government debts. Verijn-
Stuart includes it also, but he excludes interest'from loans issued
for covering deficits in the ordinary budget and Pigou excludes
if loans have been employed unproductively. Lindahl excludes
income from Government debts, Bowley-Stamp exclude interest
of Government loans from total 'social income’, treating this
item as transfer, but they include it in 'aggregate income’.
All main authors exclude war loans.
One might be doubtful whether it is sound to differentiate
between productively and unproductively employed loans. The
term ^productive’ is open to discussion. Why should the
production of defensive weapons, say, 5,000 British aeroplanes,
if we had produced them in the years 1935-39, and which would
most likely have prevented this war, be called unproductive, but
on the other hand the production of a pair of silk stockings,
a luxury perhaps not lasting longer than a week, be termed
productive?
War loans, as mentioned before, are excluded by all authors,
but not loans, spent for the same or similar purposes, issuefd
l6 THE DEFINITION OF NATIONAL INCOME
before the outbreak of war. Germany, for instance, spent and
borrowed more for armament purposes between 1934 and 1939
than in the first year of the present war. To differentiate between
peace and war loans seems somehow arbitrary and not always
justified.
10^. (i) The American authorities, as well as Colin Clark,
include employers' social insurance charges; Bowley-Stamp also
include employers', but not Government, contributions.
10^^. (ii) The majority exclude non-contributory social
insurances, amongst them Mitchell-Kuznets; Kuznets, without
collaboration, seems to include this item.
105. (iii) Lindahl, Matolcsy- Varga, Colin Clark, Copeland
and Irving Fisher include pensions. Fellner excludes them.
Bowley-Stamp exclude pensions derived from public funds, ex-
cept old age pensions, unless they are above the tax limit.
They include it, however, as 'other income' in aggregate total
income.
1 1 <2. Services from indirect taxation are included in estimates
by German authorities; the cost of these services is deducted.
Colin Clark adds the proceeds of indirect taxation to total
individual income. Flux includes it in the value of product.
See also No. 2 <2, p. 8.
12. (i) All authors include income in kind, but often not in
its full value. Lindahl, therefore, suggests that addition should
be made.
0
12- (ii) The, main authors exclude board and lodging, when
charity, and treat this as transfer of income.
1 4. Bowley, Matolcsy-Varga, Irving Fisher and the American
authorities exclude increment in the money value of goods.
Bowley thinks one may deal with this item in a supplement.
Gini includes it, thdugh with reservations.
The tax authorities in most countries allow the choice between
current market prioes or cost prices, whichever is the lowest.
The tax authorities in Germany and France Jnclude this item
if a firm is sold or liquidated.
Kuznets points out {Commodity Flow and Capital Formation^
Voli):
It was considered advisable to see what results would be obtained
THE DEFINITION OF NATIONAL INCOME 17
if no effort were made to allow for changes in the ratio of construction
materials to total value of construction.
First, it may be assumed that the ratio of value of construction
materials to total value of construction is constant when both are
measured in fluctuating current prices. The implication is then either
that both prices and quantities of materials, as compared with those
of labour and of other production elements, change from year to
year in exactly the same fashion or that if changes in prices
and in quantities of the two groups of production elements are
divergent, they are equally divergent in opposite directions. The
latter implication is reasonable if it is assumed that the two
groups of productive elements can be easily substituted for each
other. . . .
The other possible assumption is that the ratio of construction
materials to total value of construction is constant when both are
expressed in terms of a constant price level. This assumption, a
direct opposite of that suggested above, implies that the technical
conditions of construction activity are quite rigid with respect to
the relative amounts of materials consumed as over against the
amounts of the other groups of production goods used; and the
variation of the ratio of the value of materials ‘to the total value of
construction, when both are expressed in current prices, results
exclusively from divergent changes in prices of these two groups of
production goods.
15.. Bowiey-Stamp, Colin Clark, Lindahl, Wagner and
Kuznets include undistributed profits. Tax authorities in the
United Kingdom, Germany, New Zealand, New South Wales
and Japan include this item, provided they know of it.
As undistributed profits may be book profits and may not be
ready for distribution in form of dividends, their inclusion in
the total of national income may sometimes lead to over-
statement; for instance, when the trade cycle has turned and
depression has set in which have used up the reserves.
16. Lindahl, as well as Pigou, thinks allowances should be
made for wasting assets of irreplaceable commodities. Matolcsy-
Varga and Colin Clark disregard them in accordance with the
practice of the tax authorities.
18. Colin Clark, Lindahl, Matolcsy-Varga and Copeland
think it advisable to make allowance for different costs of living
in different parts of a country.
There are, however, great difficulties, and division might
therefore be impracticable. If a distinction should be made,
the division into urban and rural districts would perhaps be the
most important one.
BNI
2
THE DEFINITION OF NATIONAL INCOME
l8
20. Distinction between production of capital and consump-
tion goods is not frequent. Kuznets differentiates between
A. Consumers’ Goods
I. Perishable II. Semidurahle III. Durable
I. At destination i. At destination i. At destination
c. Finished — ^bread, a. Finished — shoes, a. All finished — pas-
coal \ised by house- clothing, etc., in hands senger cars, jewellery,
holds, etc., in hands of households furniture, in hands of
of households households
aa. Residential
buildings
bb. AH other
b. Unfinished — none b* Unfinished — ^none b. Unfinished — none
J2, In circulation 2. In circulation 2. In circulation
a. Finished — same as a. Finished — ^same as a. Finished — ^same as
under A I, i but » under A II, i < 2 , but under A III, i a, but
in hands of producers in hands of producers in hands of producers
and distributors and distributors and distributors
b. Unfinished — raw b. Unfinished — raw b. Unfinished — raw
materials, fuels, sup- materials, fuels, sup- materials, fuels, sup-
plies, so far as they are plies used for produc- plies used for produc-
used for ' production, tion, transportation tion, transportation
transportation and and distribution re- and distribution re-
distribution resulting suiting in A II, la suiting in A III, i a
in A I, la
. B. Producer's’ Goods
I. Perishable II. Semidurahle III. Durable
None None i. At destination
a. Finished — ^industrial,
farmmachinery, build-
ings, trucks, etc., - in
hands of business units
who will use them
b. Unfinished — ^none
2 . In circulation
a. Finished — ^same as
under B III, i a, but in
hands of producers
and distributors^
b. Unfinished — raw
materials, fuels, sup-
plies, etc., used for
production, transpor-
tation and distribution
renting in B III, i a
THE DEFINITION OF NATIONAL INCOME I9
Lindahl {National Income of Sweden) points out:
A general differentiation has been made between non-durabie and
durable goods. All goods that may be assumed to have been con-
sumed within a year are non-durable goods. These include all raw
materials and fuel, and — of consumers’ goods — ^provisions, clothing
and household utensils of brief duration. Ail services come under
this heading. Durable goods include all plants, dwelling-houses,
machinery, implements, and generally all goods, the durability of
which exceeds one year.
See also No. 20 in Section (United Kingdom).
22. Bowley, Colin Clark and Lindahl treat advertisement
as a cost. Kuznets finds it impossible to distinguish which part is
expense and which part is goodwill.
23. The treatment of depreciation is beset with ambiguity.
So far as ordinary depreciation takes place, deduction — equal
amounts spread over several years — ^is generally accepted by
the main authors as well as by the tax authorities. There is, of
course, a variety as to the percentage allowed for the different
items.
Things, however, look quite different if replacement is con-
cerned. A comparatively new machine, or even a new plant,
has sometimes to be replaced only because technical progress
or new inventions makes its further use uneconomic. In such
a case many tax authorities, as for instance, the British, are
open to a compromise. But there is, of course, no hard and
fast rule about the procedure. This item sets problems to the
entrepreneurs as well as to the tax authorities.
24. In regard to the division of Government expenditure
Mitchell-Kuznets point out:
In estimating total income produced at its source in the busings
establishment, one has the alternative of either deducting taxes or
leaving them undeducted. In the first case, taxes are deducted
because they constitute payments by business establishments to the
government for services rendered, and are thus on a par with other
business payments of the firm (for materials, labour, etc.). It is then
necessary to cover separately the service activity of the government,
i.e. to include in the national income total the value of services
rendered by government employees and government creditors (in
the form of wages to government employees and interest payments
on government debt). In the second case, taxes are not deducted;
but on the other hand, no allowance is made for any income pro-
duced by government labour or government capital. This last
procedure, however, rais^ two difficulties: (i) it does not yield a
20 THE DEFINITION OF NATIONAL INCOME
proper industrial allocation of income produced, unless it is con-
sidered that government activity is a non-productive type of pursuit,
constituting a pure draft upon the economic system of the country,
(2) it is impossible to segregate income produced from income paid
out. For both reasons the first procedure, namely, the deduction of
taxes paid by business establishments and the independent estimate
of income arising from government activity, seems to be preferable.
But if this procedure is followed the possibility that some relief
expenditures are paid by the government out of taxes on business
establishments gives rise to a difficult problem. To the extent that
relief is paid out of these business taxes, and the latter are subtracted
from the net income of the business establishments, it constitutes a
part of income produced but not accounted for, a part which is paid
by business establishments to individuals via the government channels.
This part should be included in both income paid out and income
produced, preferably as a separate item. But any student who has
ever worked with government data showing government receipts
and expenditures can readily visualize the maze one gets into in any
attempt to trace a specific government expenditure back to some
distinct source.
See also Lindahl, Question 2c.
25 . The income of societies, charities and other corporate
bodies is often omitted in official and other estimates. The
great part, however, is included in the British accounts.^ Colin
Clark suggests that these incomes have to be added back, when
tax exemption has been made to charities and educational
institutes.
Fellner advocates that, when subjective method is used, not
only the incomes of individuals have to be considered but also
income of societies, corporations, communities, municipalities,
foundations, churches and State, in other words ‘ des personnes
morales’.
Lindahl thinks income from capital, owned by idealistic
associations, can be regarded as the income of the members
of the associations.
Stamp points out that the main difference between total
income assessed and the aggregation of individual income is the
income of clubs and societies not traceable to individuals.
26 . A. E. Feavearyear^ analyses the national expenditure
for the average of the years 1924-27, and 1932. He divides
1 But see ff. Campion, Public and Private Property in Great Britain.
2 ‘The National Expenditure, 1932*, Economic Journal, 1934. See also
A. E. Feavearyear, ‘Spending the National Income’, ibid. 1931, and Myra
Curtis, ‘National Income and Expenditure and the Measurement of Saving %
ibid. 1935.
THE DEFINITION OF NATIONAL INCOME 21
expenditure into food, maintenance of the home, clothes, direct
taxation, liquor, smoking, trade, entertainments and sport,
sickness, and accidents and State insurance, religions, reading,
miscellaneous expenditure, saving including new houses and
furniture.
27. Kuznets compares distribution of national income
{a) according to industrial organization,
(6) according to type of income.
In National Income^ 1929-32, he divides national income paid
out into total labour income, total property income, total
entrepreneurial income (net rents and royalties and entre-
preneurial withdrawals). Then he gives figures for income
produced by industrial divisions, and income paid out by
industrial divisions.
Colin Clark {National Income and Outlay^ p. 125) shows a table
for the distribution of the Product of Industry divided first into
wages, salaries below and above ;^i6o and rent, interest and
profits. At the same time this table is split into manufacture,
mining and building, railways, agriculture, ownership of
dwelling-houses, other transport, commerce and services. This
division into income arising from various sources shows also
the number of persons occupied in the different industries.
This table combines the answers to our Questions 27, 28 and 29.
28. Bowley^ divides total gross income into
Actual income:
(i) Schedules A, B, C; (2) Schedules D, E.
Wages and earnings.
Unearned income. ^
Sundries: (i) Pensions; (2) Employers’ contribution;
(3) Others.
Bowley-Stamp, in The^ National Income^ 1924, make the
following division among factors :
Aggregate income.
Disposable income.
Individual income and Corporate income.
Earned and Unearned income.
Social income.
. Taxable income.
I 'Some Constitueiits of the National Income/ Journal of the R. StaL Soc.,
1940.
22 THE DEFINITION OF NATIONAL INCOME
In The Income of the United States, its Amount and Distribution,
1909-19 (by the Staflf of the National Bureau of Economic
Research) 3 VoL i, an analysis is made of the estimate by sources
of production.
In the second volume [Income of the People of the United States,
1922) the national income is divided among persons receiving
income under and over $2,000.
See also No. 27, Colin Clark and Kuznets.
29 . Division of income among persons is shown for U.S.A.
by W. I. King [The Wealth and Income of the People of the United
States, 1915) in an estimate of the distribution of income among
families of the Continental U.S.A. in 1910,
The table shows [a) the thousands of dollars income, and
[b) the number of families classified according to income classes.
Bowley, in an article ^ The British Super- tax and the Distribution
of Income’ [Quarterly Journal, 1914), quotes super-tax yields and
shows how it is divided among persons chargeable. The diagram
of frequency, shown in this publication, corresponds to Pareto’s
Law also for higher incomes between ^5,000 and (for
the year 1911-12), but not above income limit of ;^555000.
Colin Clark gives a similar table of surtax progress for a later
year [National Income and Outlay, p. 105). See also No. 27, Colin
Clark and No. 28, Income of the People of the United States, by the
Staff of the National Bureau. of Economic Research, Vol, n,
1922.
In the 36th Report of the Commissioners of H.M. Inland
Revenue for the year ended on 31 March 1920 there is a table
showing income classes, and number of persons having the
income of" the especial class. See also No. 29 in' Section on
British answers, p. 51.
30 . ^Gross’ and ‘net’ income: these terms are not always
used in the same sense, Kuznets point out:
Gross national product includes, besides income payments to
individuals and net savings of enterprises, the amounts deducted by
the users of durable capital goods as an allowance for the current
consumption of these goods in the productive process/ If these
deductions, which appear largely as depreciation and depletion
charges, are added to net savings of enterprises, the resulting total
repr^ents the share of gross national product retained by enterprise.
If we designate this share as gross savings of enterprises, then gross
national product, at the point of distribution, is equal to income
payments to individuals plus gross savings of enterprises.
THE DEFINITION OF NATIONAL INCOME 23
Colin Clark defines net national income = gross national
income — maintenance and depreciation. .
See also No. i in Section on British answers.
3 1 . Real income is generally measured by using cost of living
index or wholesale index as the denominator of money income,
though this is, as every statistician knows, rather a rough method.
Stamp points out that it would seem that a more detailed effort
to suit the sectional indices to sectional parts of income is very
desirable, and the use of cost of living index is also worth con-
sideration. The recent official American estimate indicates that
it requires an all-inclusive index covering wholesale and retail,
and all groups of people, and such an index is not available.
Colin Clark says :
The basic idea is that such an index should incorporate an index-
number of the current prices of goods and services for consumption,
and that weighted additions should be made for the prices of visible
and invisible exports and of home investment goods, and that then
a negative weight should be given to the price of imports.
According to Lindahl :
As it is impossible to obtain a satisfactory price index, one of the
available index series will, therefore, have to do. The choice has
fallen on the cost of living index, as this is based on prices more in
conformity with the prices of the finished products than the other
indices, which are based on the prices of raw materials and semi-
finished products.
W. I. King recommends the use of five indices, the first for
measuring the income for earned manual and clerical workers,
the second for farm labourers, the third for farmers, the fourth
for families spending for direct goods $5,000 and over, and the
fifth for families spending $25,000 and over,
Mitchell-Kuznets point out:
Whatever price indices may be selected for making price adjust-
ments, be they wholesale commodity and services indices in the case
of national income produced, or cost of living indices in the case of
national income consumed, we are faced with greater difiiculties
not only because of drastic price changes which upset the ^ price'
^system’ and make reliance on sample price quotations most
dangerous; but also became rapid shifts are occurring in the quality
of what appear to be identical commodities, ^and marked substitution
of one cojnmodity group for another in the total output of our
economy as well as in the consumption of its individual members.
In the official estimates of Germany’s national income the
cost of living index is applied, in that of Canada the wholesale
price index is used.
THE DEFINITION OF NATIONAL INCOME
24
In the Measurement of Social Phenomena Bowley writes about
real income:
An obvious, if crude, correction would be by the use of index-
numbers of the purchasing power of money; but, even if we can get
over the trouble of deducing retail price changes from wholesale,
index-numbers still refer to commodities and not to services directly
rendered. In particular ordinary index-numbers do not include rent,
which affects all classes, and the poorer more closely than the richer ;
nor domestic or professional services, which affect the rich rather
than the poor
Again, as the country becomes more densely populated, the free
gifts of nature are appropriated and become marketable and their
annual value is included in somebody’s income. Allowance is made
in estimates of agricultural labourers’ wages for the free fuel they
used to have; but no allowance is made for scarcity of blackberries,
nuts, mushrooms, etc., when they are improved away by building
for closer cultivation, nor for the greater or less enjoyment of fresh
air or scenery. ...
It should be observed that in all measurements of this kind changes
in totals or averages may be so great as to make it certain that
qualifications and corrections would not over-ride the change; while
the small changes might easily be nullified by such corrections. The
trouble from the point of view of scientific measurement is that we
cannot always estimate any limit to the margin of error, so that an
element of complete uncertainty or guesswork may remain.
In Chapter iv below this subject is discussed in detail.
2d. ANSWERS OF THE PRINCIPAL AUTHORS
TO SUCH OF THE ABOVE Q^UESTIONS AS THEY CONSIDER
A. L. Bowley
Lord Stamp
1 6 .
Defines it as income
accruing to residents.
Adheres to it.
2 a.
Includes.
_ —
2 b.
Includes.
Excludes in a closed
community.
2 c.
Includes.
4.
Leaves question open.
Includes where met
by direct or taxing
payments reducing
industrial profits,
4 a. Includes. —
4 3. Includes. —
4 Includes,
4 d. Includes^
6. Includes.
8* Excludes.
8 a. Excludes,
Includes.
Includes.
Excludes.
Excludes.
Bowley-Stamp
See Bowley.
Not counted.
Counted only under
employers’ contri^
butions to insurance
funds.
Exclude.
Exclude.
THE DEFINITION OF NATIONAL INCOME 25
A. L. Bowley Lord Stamp
Bowley-Stamp
8 ^.
Excludes.
Excludes.
8 c,
Includes.
Includes.
Sd.
Excludes.
Generally excluded;
possible exception;
co-operatives.
9 b,
—
Excludes unless busi-
ness expense.
10 a, \
(i) Excludes [1919 pub-
lication].
Excludes. 1
(ii)
—
— J
10 b.
(i) Excludes, but some-
what undecided.
Includes.
(ii)
—
(iii)
Includes; also soldiers
pensions, but is
somehow reluctant.
11 a.
13.
—
Omits it; follows
Coates.
14
Should be treated
separately.
—
14: b-d. Undecided regard-
ing lowest value prin-
ciple.
15,
Includes under
Schedule D (in-
come tax).
17.
Premiums to be de-
ducted from net out-
put figures.
21 .
Includes services
rendered direct to
consumers.
22 .
Treated as cost.
—
23,
Gives a rough system.
—
25.
—
Not always possible
to include.
27.
'
Scheme for subjec-
tive and objective
method.
31.
Suggests computing
index-numbers out
of budgets for calcu-
lating real income.
Sectional indices for
sectional parts of in-
come and also con-
siders cost of living
index.
Exclude.
Include.
Exclude.
Exclude from 'social
income’ . but in-
clude in 'aggregate
income’.
Exclude receipts but
include employers’
contributions.
Exclude.
Exclude,
Include health in-
surance but do not
count insurance paid
out to recipients.
Include.
Refer to 68th Report
of Commissioners of
Inland Revenue.
Computation should
be corrected by a
number related to
wholesale price and
cost of living index.
26
1 h.
4.
4
5.
6 .
7.
' 8fl.
8 tf.
9 ^.
10
10
10 b.
10 b.
10 b.
lla.
14.
15.
16.
17
18.
19.
22 .
23 a.
24.
25.
26.
27.
30.
31.
lb.
3.
6 .
9 a.
9 b.
10 a.
10 b.
104.
15.
17.
18.
19.
THE DEFINITION OF NATIONAL INCOME
Colin Clark
Adheres to it. ‘Goods and services which are cmtomarily exchanged
for money.’
Includes at cost price.
bs Ci d. At cost price.
Includes 3 gives no details.
No allowance made.
Includes.
Excludes.
Excludes.
Includes at wholesale prices.
Excludes. j
(i) Includes.
(ii) Excludes.
(i) Includes charges paid by employers.
(ii) Excludes as relief payments.
(iii) Includes pensions to retired employees of the State or firmsj but
excludes old age and widows pensions.
Includes; changed his opinion since 1932 regarding rates on business
premises.
Yes ; but has doubts about decrements.
Includes.
No; on account of technical difRcuities.
Insurance is a kind of savings ; expenses are to be deducted.
Yes; four areas in the U.K.
Savings =£ excess of income over consumption.
Treated as cost.
4 per cent compound interest over 60 years for buildings, other
property according to inland revenue allowance.
Yes.
Includes.
Yes; where exemptions have been made they must be added.
Yes. Checks his results by Feavearyear’s figures and refers to an
article by Myra Curtis.
Gross income —cost of repairing and replacing of capital instru-
ments = net income.
Suggests price index for comparison and makes various other
proposals.
M. A. Copeland
Adheres to it.
Treats it as transfer payment.
Includes,
Excludes.
Excludes, but treats only college fees,
(i) Includes. *
(ii) Undecided.
(iii) Includes pensioxas.
Includes undistributed profits as far as non-corporate companies are
concerned.
Does not take into consideration.
Thinks it advisable, but cannot recommend any method.
Social income— consumption = savings.
THE DEFINITION OF NATIONAL INCOME
•27
23 a. Follows accountants’ procedure.
24. Takes subsidies as kind of transfer items.
28. Suggests three indices: consumption index, index of wealth, index for
inventories, etc.
29. Gross social value— depreciation and depletion = net social value
product,
Irving Fisher
1 h. Adheres to it, but does not stress the point regarding nationals.
7. Includes.
10 (iii) Includes.
14. Excludes.
19. Savings are not income. Interest of savings is income.
23. In case of depreciation fund, uses it to reduce realized income to
earned income.
S. Fabricant
17. Treated as losses on capital account,
23. Takes the value of the current services rendered by capital goods
and used up in production.
31. Measures capital and capital consumption in current prices, but
allows constant prices for the purpose of time comparison.
F. V. Fellner
1 b. Adheres to it.
2 a. Excludes.
4 g. Excludes from private income.
6. Excludes as not produced in the period.
7. Excludes as not produced in the period.
8. Should be excluded.
9 a. Includes.
9 h. Excludes.
10/2. (i) Includes.
10 (ii) Excludes, but not quite decided.
10 5. (iii) Excludes, but not quite decided.
23 a. Depreciation percentage for machines 1*72 per cent of value of gross
production, or based on horse-power.
25. Must be added when using subjective method.
27. Compares subjective and objective methods.
3 1 . Proposes to measure in constant prices, for instance in pre-war prices,
so as to be able to eliminate changes in the value of gold.
Interest. Interest due inside the country balances and has to be left out.
Edwin Gannan
6. Includes.
7. Excludes as a rule.
8 a. Excludes as a rule.
8 d. Excludes as a rule.
9 5, Excludes to avoid double counting.
11 a. Excludes.
23 a. Deducts sum paid into the depreciation fund.
25. Includes ordinary net mcome, but excludes gifts and legacies.
28 THE DEFINITION OF NATIONAL INCOME
C. A. Verijn-Stuart
1 b. Adheres to it.
6. Includes.
7. Includes.
8 a. Excludes because not quantitatively definable.
10 ^ 2 . (i) Includes generally,
10 (iii) Includes.
2 ! . . Includes direct services to consumers.
3 1 . Cost of living index seems the best although not satisfactory.
CoNRADO Gini
1 r. Adheres to it.
3. Deducts Government subsidies from its expenditure.
4 a. Deducts from public expenditure.
4 r. Deducts from public expenditure.
4 d. Deducts from public expenditure.
6. Includes.
8. Should be included.
8 a. Should be included.
10 a. (i) Interest should be computed in the private income of the nation,
just as it is computed in individual incomes, and should be
deducted consequently ftom the amounts paid in taxation.
10 (i) Excludes.
1 1 . Includes both generally.
11a. Includes, unless it raises public revenue.
13. Deducts railway fares.
14 a. Includes changes in value which can be forecast, but with some
doubts on revenue figures. “
17. Premiu m s are not to be deducted, but insurances paid out are to
be deducted.
31. Is not content with any existing index, as they do not consider
services, but does not offer solution.
S. Kuznets W, C. Mitchell-S. Kuznets
1 b.
Adheres to it.
Adhere to it.
la.
—
Give definition. (See also i b.)
4 a.
Excludes.
6 .
Includes.
Include.
•7.
Excludes.
No hard and fast rule.
8.
Excludes.
No hard and fast rule."
8 a.
Exclude.
8 a.
Includes.
10 (ii) Includes. (See Mitchell-
Kuznets.)
Exclude. (See Kuznets.)
12. (i)
Includes (no details given).
^
14 a.
Calculates in current as well as
in constant prices.
—
14 L
Gives two alternatives in fluc-
tuating and in constant prices.
, —
15.
Includes.
' ,
17.
Fire losses = capital consumption.
. —
THE DEFINITION OF NATIONAL INCOME 29
S. Kuznets
W. C. Mitchell-S. Kuznets
19.
Gives definition for gross and net
savings.
Income consumed 4 - sa\4ngs by
individuals = income paid out.
Income paid out 4 - net savings
by business firms = income
produced.
20 ,
Consumers* goods = commodities
used by ultimate consumers.
Producers’ goods = used by
business firms.
21 .
Includes (i) industries dealing
with the production of com-
modities, ( 2 ) commodity hand-
ling, ( 3 ) service industries.
22 .
Thinks it impossible to distin-
guish between cost and good-
will.
23 fl.
Uses ‘cost or market whichever
lower* principle for valuation
of capital goods.
Conservative accountant prac-
tice may mislead during times
of violent price changes.
24.
t
If taxes are deducted from busi-
ness incomes, the different
Gk)vemment services are to be
separated.
27.
Distribution by industrial organi-
zation and type of income.
28.
Division by labour income, etc.
See p. 2 1 .
—
30.
Gross national income — value of
commodities consumed in the
process of production = net
national product.
31.
Applies revaluation by means of
various indices.
Wholesale price index for national
income produced and cost of
living index for national in-
come consumed.
Erik Lindahl
1 < 2 . Adheres to it; excluding services of foreign vessels in Swedish
waters.
2 a. Includes.
2 h. Excludes (in a closed community).
3. Not considered in calculating the value of commodities produced,
but deducted from public expenditure.
4. Includes 'with certain exceptions. (See 4 ^, ^ lOa.)
4 a. Gives a detailed system.
4 by Cy dy e. Valued under the heading public administration.
4/. Values at the sum of the expenses occurred.
4 g* Includes at cost.
6 . Includes.
I 7. Includes.
30 THE DEFINITION OF NATIONAL INCOME
8 a. Includes all women over 1 5 years, but thmlcs exclusions would be
preferable.
8 b. Not quite decided.
8 c. Includes at market price.
8 d. Excludes unless measurable at current prices.
9 a. Excludes generally, but includes gifts from emigrants to U.S.A.
10 <3. (i) Excludes.
10 b, (iii) Includes pensions.
12. (i) Includes, based on special enquiry.
12. (ii) Excludes when charity.
13. Adds allowances for public servants.
15. Includes.
16. Gives formula.
18. Differentiates only regarding dwellings.
20. Refers only to durable and non-durabie goods.
22. At cost.
23 a. Gives list of depreciation ratios for buildings and machinery,
23 c, d. Calculates it as capital gains or losses which must be debited or
credited to the income.
25. Includes.
27. Compares national income inclusive and exclusive of income from
buildings and inclusive and exclusive of unpaid work.
30. Gross national income— (services which have been double counted
-H raw materials and the goods used in the production process) = net
national income.
31. Uses cost of living index, and for real investments the best available
price index, but is not satisfied.
Entrepreneurial income. Entrepreneurial incomes are the amount by
which the exchange value of the productive contribution exceeds the total
of the contractual income.
K. Mori
1 a. Adheres to it. (See also i b.)
1 b. Adheres to it. (See also i a!)
7. Includes.
12. (i) Includes ; doubles money wages.
28. Multiplies total number of units with estimated average market price.
W. H. Coates
8 d. Excludes.
10 < 2 . (i) Includes.
10 Includes.
11a. Includes employers’ contributions.
13. Omits as too difficult to find out.
J. R. Hicks
1 h. Adheres to it,
1 9. Saving = income — consumption.
23 a. Thinks exact calculation will hardly be possible to match expenditure
and consumption*
THE DEFINITION OF NATIONAL INCOME
31
Alfred Marshall
1 a. Adheres to it regarding his main concept, but on account of his
treatment of foreign investments may also be counted under i h,
, i b. See also i a.
8, 8 d. Not reckoned as part of the national dividend, but should
be reckoned separately.
9 b. Excludes.
10 ^z. Excludes.
23 Allows for depreciation, but does not specify.
30. The net income is found by deducting the outgoings that belong to
its production from gross income.
M. Matolcsy-StVarga
1 b. Adheres to it.
2 a. Includes.
3. Adds net receipts, of state monopolies (Grain Certificate Fund not
added).
4. Excludes when objective system applied.
4 a. Includes theoretically as immaterial wealth, but thinks it statistically
not approachable.
4 g. Includes if paid out of indirect taxation.
6. Includes.
7. Considers it negligible.
8 a. Includes.
9 Includes; also remittances of emigrants.
10 (iii) Includes, but excludes it from taxes.
11. Makes no distinction.
1 1 <3. Includes taxes which tend to raise prices.
12. (i) Includes for farm workers.
14. Excludes.
16. No; on accoimt of statistical difficulties.
18. Differentiates between rural and urban areas.
23 a. Deducts 10 per cent from house values.
27. Makes comparison between seven concepts.
31. Valueing has been carried out at current prices, and revaluated in
the 1925-26/27 price level.
A. C. PiGou
1 h* Adheres to it.
2 a* Includes main part.
4. Excludes.
4 d. Includes.
6. ' Includes,
7. Excludes.
8. S a, d.^ Excludes, but should be accounted for separately. (See
Marshall.)
9 b* Excludes; also allowances received by children from their parents,
10 (ii) Excludes.
10 (iii) Excludes old age pensions, but includes pensions received by
civil servants.
THE DEFINITION OF NATIONAL INCOME
32
1 1 . Makes a distinction between income from public services and income
tax and death duties.
16. Yesj with reservations.
23 Depreciation is made good by the provision of the original money
value of new machines.
28. Suggests corrections, but makes no proposal.
A. W. Flux
1 a. Adheres to it.
1 1 . Includes only customs and excise duties, but does not deal with direct
taxation.
ll a. Includes,
21. Wants to include derivative services.
27. Compares factors of production and goods and immaterial services
produced.
A. Wagner
1 b. Adheres toit. Defines it as the income of a population of a certain area.
4. Includes.
9 b. Excludes.
1 1 a. Excludes.
15. Includes.
25. Includes.
31. Computation in one and the same unit seems impossible. (Makes
no suggestion.)
3zz. OFFICIAL ES TIMA TES
COUNTRIES WITH, AND AUTHOR’S IN'i^ERPRETATIONS
Canada
1 b. Adheres to it.
2 b. Includes.
6. Rental value of owned houses are not included in income-tax returns,
7. Excludes.
8. Excludes.
8 <2. Excludes.
8 b. Excludes.
8 c. Only included if persons derive their main livelihood from such
activities.
12. (i) Includes.
23. Certain deductions have been made to arrive at the net national
income regarding the material consumed in the process of pro-
duction.
30. The ofiicial wholesale price index has been used to compute the real
national income.
31. Net income = gross income — deductions connected with the main^
tenance of the industrial equipment of the country, not only
providing for depreciation but also for obsolescence and replace-
ment by new and improved apparatus of production.
Explanatory Motes:
Sources :
Domimon Bureau of Statistics, the Canada Tear Books, particularly the
Canada Tear Book for 1934/35 giving the national income for 1920-32.
THE DEFINITION OF NATIONAL INCOME
33
Statistics of service and repair work were not collected after 1922, and to
effect comparability, the totals for the year were repeated in 1923 and 1924.
The totals for 1925 and 1926 were estimated according to the percentage
change in data for manufacturing.
The survey of production does not include transportation, refrigeration
and merchandising. Personal and professional services, for instance teachers
and doctors, are also not included in the survey.
Germany
1 h. Adheres to it.
2 a. Includes excise duties.
2 h. Includes import duties.
4 fl, h. Ail expenditure for public services are to be considered at cost.
5 . Increments in the value of stocks and shares are included (with
certain exceptions).
6. Includes.
7 . Excludes.
8. Excludes services rendered to oneself.
8 a. Excludes.
8 b. Includes.
8 c. Includes.
9 a. Excludes.
9 b. Excludes.
10 (i) Includes.
10 b. (i) Includes unemployment assistance. Also includes contributions
of employers towards social insurances.
10 (iii) Includes pensions (and war pensions) ; also those paid by the
Government and by local authorities to foreigners wherever
their domicile may he.
11 a, , Includes government income from indirect taxation, but deducts
cost of services paid out of indirect taxation.
12 . (i), (ii) Includes.
14 . Includes profits derived from increments in the money value of assets
when a firm or corporation is sold or liquidated.
15 . Includes.
\1 a. Savings are included.
22 . Advertisement is reckoned as a cost.
23 - Depreciation of goods is deducted.
25 . Includes.
31 . To arrive at real income for 1928 cost of living index is applied.
Explanatory Notes:
Sources:
Einzelschrift zur Statistik des Deuischen Reiches. Nr. 23: Intermiionaler
Steuerbelastungsvergleich. Nr. 24: Das Deutsche Volkseinkommen.
Statistisches Jahrbmh fUr das Deutsche Reichy 1936.
Wirtschqft und Statistik^ Nr. 22. Das Deutsche Volkseinkommen, 1932.
The definition of income refers to the years 1925 to 1931. That of the
Statistisches Jahrbuck to the years 1913 and 1927 to 1935.
Payment for ‘ reparations ’ resulting from the peace treaty are also included
as income.
BNI
3
THE DEFINITION OF NATIONAL INCOME
34
According to Wirtschaft und Statistik the major error in the estimates
results from the valuation of agricultural produce consumed by farmers’
families, owing to the difficulty of assessment.
The agricultural produce consumed by farmers’ families is included at
wholesale prices.
National income, spent by the Government on certain public services, are
excluded from Germany’s official estimates. These items are expenditure for
the sole use of the state and for purposes other than production. Thus, for
instance, expenditure for road maintenance and for armament, spent out of
taxation, are not included [see Statistisches Reichsamt^ Sonderheft 24]. Up to
the year 1933 these items were relatively small, compared with the total
national income; later on, however, they became more important, when
expenditure for armament etc., spent out of taxation, increased.
Japan
1 b. Adheres to it.
4 . Earnings of public services are included.
7 . Excludes.
8. Excludes.
8 a. Excludes.
9 a. Remittances from nationals abroad are included.
10 a, (i) Includes income from Government bonds.
10 '^. (iii) Pensions and annuities are included.
12 . (i) Includes.
25 . Income of State undertakings and State properties are included.
Explanatory Notes:
The above refers to the estimate of the national wealth and income of
Japan proper {Bulletin de VInstitut International de Statistique, 1931) by K. Mori,
chief statistician of the Bureau of Statistics in the Imperial Cabinet, Tokyo.
The estimate is for the year 1925,
The estimate includes income entirely evading the income tax. Mori
assumes this to be 10 per cent of the total income below the exemption limit.
The above estimate gives little detailed explanation although it is
authoritative. It can be supplemented by definitions given by Professor
A. Shiomi as follows :
2 Excludes excise duties from industrial net profit.
2 b. Taxes are included.
15 . Undistributed profits of corporations are included.
23 . Depreciations of plant and equipment are allowed for.
Explamtory Notes:
Sources:
S. Shiomi, ‘ On Japan’s national wealth and income Economic Review ^
Kyoto University, VoL rv, No. i.
S. Shiomi, ‘Survey .of the distribution of the people’s incomes in the
light of the household rate’, ibid. VoL vm. No. i.
‘Japan’s national income in 1930’, ibid. VoL ix. No. 2.
The first two articles refer to the income of the year 1^2^125.
THE DEFINITION OF NATIONAL INCOME
35
New Zealand
6. Excludes.
7. Excludes.
8. Excludes.
8 a. Excludes.
9 b. Gifts from parents or relatives are excluded.
10 b. Pensions under the Pension Act, superannuations and such like are
included.
1 1 All forms of public income are excluded.
12. (i) Payment in kind, free housing, etc. is excluded-
12. (ii) Gratuities are included.
15. Undistributed profits of companies (inclusive state taxation) are
included.
Explanatory J^otes:
Sources :
Dominion of New Zealand Population Census, 1926, VoL ii, Incomes 1930.
New Zealand Official Tear Book, 1935-
In the Population Census we find the following explanation:
This is not the total private income of the population but only an
aggregate derived from Census data in the case of lower incomes and from
the statistics of incomes of persons and firms assessable for income-tax
purposes in the case of higher incomes.
The income of the Maoris is estimated as being mn.
The Official Tear Book of 1935 explains:
In the two later estimates, although not in that derived chiefly from
the 1926 Census records, certain non-monetary emoluments (e.g. free
housing, free fuel and lighting where such are in reality part payments for
services) are given a monetary equivalent and treated as income.
1 a. National income within the country (outflow to other countries not
deducted, nor income added coming to New Zealand).
6. Includes owner-occupied dwellings.
7. Excludes.
8. Excludes.
8 <2. Excludes.
10 a. (i) Includes income from Government debts.
10/2, (ii) Excludes interest on war loans.
10 (iii) Excludes pensions.
15. Includes undistributed profits.
17 a. Includes savings of companies in the form of reserves.
25. Includes profits of municipal State trading services of clubs and
charitable societies.
30. Net income = total income - war loan interests and pensions.
Explanatory Notes:
The above estimate refers to F. B. Stephens (Department of Internal
Affairs, Wellington), National Income of New ^937^ reprinted from
the Economic Review, 1936.
The estimate does not deal with incomes awaiting income tax.
The income estimate for farming is ‘rough’, according to the authors
explanation.
Two-thirds of the interest on the national debt are State trading ventures.
3-2
36
THE DEFINITION OF NATIONAL INCOME
U.S.A. Department of Commerce
i b. Adheres to it. (See Kuznets.)
4 a. Includes. (Gives no detail.)
*6. Excludes.
7 . Excludes.
8. Excludes. Thinks there is no satisfactory basis.
8 a. Excludes. Thinks there is no satisfactory basis.
9 b. Excludes.
10 ^. (i) Excludes.
iO (i) Includes.
10 (iii) Excludes.
12 . (ii) Excludes.
14 . Excludes. Exception, professional dealers in assets whose profits and
losses are held to measure the compensation for their services.
1 7 . Public insurance treated as transfer of income.
19 . When income produced exceeds income paid out, the business
enterprises of the nation retain the residual portion of the net
product, which is termed ‘positive business savings*.
30 , Income produced is derived by adding positive business savings to,
or deducting negative business savings from, income paid out
(except for agriculture).
31 , Price index of finished products for gross product of industry, cost
of living index for income paid out.
Entrepreneurial income. Net rent royalties and entrepreneurial with-
drawals are entrepreneurial income payments.
36 . SEMIOFFICIAL ESTIMATES'
COUNTRIES WHERE INFORMATION IS INDEFINITE
Australia
1 6. Uses income method.
6. Includes 5 per cent of capital Value, less repair and maintenance.
7 - Excludes.
10 6. (i), (ii), (iii) Includes pensions and superannuation, but excludes
Commonwealth old age pensions and invalid pensions. Excludes
also retiring gratuity.
5 . Includes undistributed profits.
25 . Includes income of institutions, as churches, schools, literary in-
stitutes and sports clubs, and gives the total estimate for these
items as £600,000.
Explanatory Motes:
The above refers to G. H. Knibbs, The Private Wealth of Australia and its
Growth, published under the' direction of the Commonwealth Bureau of
Census and Statistics in 1918. The material is based on the war census of
30 June 1915. There is* an income estimate for Australia by Colin Clark
and G. Grawford, Mational Irwome of Australia for the years 1901—3, 1914-15
up to 1937/3^* It refers to real national income at 1923-27 prices.
1 6. Refers to income of residents.
2 . Includes indirect taxation.
4 * Includes salaries of civil servants.
THE DEFINITION OF NATIONAL INCOME
37
6. Includes.
7 . Excludes,
10 a. (i) Interest of national debt paid in Australia is deducted so as to
avoid double counting.
10 (ii) War debt interest is excluded, as transfer.
15 . Includes undistributed profits of companies.
27 . Gives two methods: (i) income produced, (2) income available.*
Belgium
1 L Adheres to it. (Income method.)
2 . Land tax is included.
4 . Salaries of officials are included.
6. Includes.
7 . Excludes.
10 (i) Includes income of state loans.
15 . Includes undistributed profits of limited and public companies.
Explanatory Notes:
The estimate refers to Fernand Baudouin, ‘Le revenu national en 1930’,
Bulletin dHnformation et de documentation, banc national de Belgique, Vol. v, No. 10,
and F. Baudouin, ‘Les finances Beiges en 1937’, Bulletin de Vinstitut de
reckerches konomiques, 1937/38.
The latter publication gives estimates for the years 1934, 1936 and 1937.
British India
1 h. Adheres to it; but owing to the lack of statistics uses' a mixture of
inventory and income method.
2 a. Includes excise duties.
2 h* Includes import duties.
6. Includes houses occupied by owners. As rental value of huts in
villages Rupees 6 is taken; most of the houses in villages are,
according to the author, hovels and command no rental value.
8. Excludes value of services rendered to oneself.
8 a. Includes services rendered by dependants.
10 <3. (i) Includes, but deducts part of the debt used for unproductive
purposes.
10 (iii) Includes pensions.
\ \ a. Includes.
23 . Deducts depreciation of goods.
Explanatory Notes:
Sources :
The estimate is computed by V. K. R. V. Rao, 1940. The estimate
refers to 1931/32.
»As the nature of Indian statistics is inadequate, the available official
statistics have been supplemented by the results of enquiries.
I Available income is equal to income produced less amount payable
overseas as interest or dividends on public or private account, plus the
(considerably smaller) sums drawn by Australian interest or dividends from
capital invested overseas.
38 THE DEFINITION OF NATIONAL INCOME
The income of urban and rural unskilled workers is reckoned under the
assumption that the income of two males equals the income of three females.
Four working dependants are assumed to have the same income as one
principal earner; and three part-time workers (subsidiary workers) the same
as one principal worker.
The estimate of the income of earners engaged in professions and liberal
arts is full of pitfalls, of which the author himself is aware.
The estimate per capita income of 206,000 people occupied in letters,
arts and science comprises 16,000 who were horoscope casters, astrologers,
fortune-tellers, wizards, witches and medicine men and 14,000 conjurers,
acrobats, reciters and ^diibitors of curiosities and wild animals.
France
1 h. Adheres to it.
2 h. Includes.
4 g. Valued at salary cost.
6. Includes.
7 . Excludes.
8 a. Excludes unpaid domestic services.
10 a, (i) Includes.
10 b, (iii) Includes pensions in national income, but excludes it in ‘social
income*.
12 . (i) Includes food for domestic servants, but excludes lodging and tips.
17 . Insurance for fire accidents at work, etc. has to be deducted, also
special insurances for the harvest and stock, in order to arrive at
the gross production of agriculture.
30 . Net agricultural production = gross production— general expenses
and —seed.
31 . Real income is computed by using cost of living index.
Explanatory Notes:
The above refers to La population de la France pendant la guerre avec un
appendice sur les revenusprivis avant et aprh la guerre^ by Michel Huber, director
of the Statistique generale de la France.
Sources:
This estimate is based on Revenus du travail des ouvriers industrielles
et agricoles (La statistique gaa^rale de la France). Published for
191 1 and 1921 and every year since 1924 in October.
Les contributions directes pour Fetablissement de Fimpot foncier,
public par Fadministration.
Salaire des employes de commerce: Tribime des employes; Salaire des
domestiques : des enquetes de la statistique generale de la France.
Salaire de chemin de fer: la Statistique officielle des chemins de fer
fen^ais.
Huber computes the total of ‘revenus prives* for the years 1913 and
1920-28. This total he calls ‘conception fiscale*.
Furthermore, he computes ‘social national income* in the sense as
employed by Bowiey-Stamp. Social income = total income — interest of
state loans and — war pensions.
THE DEFINITION OF NATIONAL INCOME 39
Two other estimates for France are by Duge de Bernonville, ‘Les revenus
prives’ and ‘Les revenus prives et les consommations’. Revue d' economic
politique, 1933 and 1935.
Duge de Bernonville is Sous-directeur k la Statistique generale de la
France. His first estimate refers to 1913 and 1920-32, his second refers to
1913 and 1920—34, The estimate of 1913 ^refers to the pre-war territory of
France and from 1920 onwards to the post-war territory. His definition,
although less complete, tallies with that of M, Huber.
France
1 a. Adheres to it.
2 a. Includes excise duties.
2 h. Includes import duties,
4. Includes salaries of officials.
6. Includes annual value of owned houses.
7. Excludes.
8. Excludes.
8 a. Excludes.
8 h. Excludes.
8 c. Excludes.
10 Includes pensions.
12. (i) Includes board and lodging and calculates lodging as 10 per cent
of the money wage, but lodging for farm labourers is excluded.
15. Excludes undistributed profits of limited companies.
31. Thinks that index figures could be used to arrive at real income but
only uses food indices to compare income of 1903 with income of
1911.
Explanatory Notes:
The estimate refers to Rene Pupin, La Richesse de la France, 1916. The
estimate is for the year 191 1.
There were 4*8 mn. farmers in 1911. Their consumption together with
that of their families of farm products is given as 3,500,000,000 francs. This
amount is excluded, as pointed out in 8r.
Greece
1 h. Adheres to it.
4. Public services are included.
7. Excludes.
9 a. Includes remittance from emigrants.
10 <2. (i) Includes interest on public loans.
10 d. Includes pensions.
27. Apart from the estimate of commodities produced and services
rendered there is also an estimate of the consumption of com-
modities by the Greek people.
Explanatory Notes:
The estimate refers to Pericles D. Rediades, ‘The Greek National Income
and Wealth in 1929% Metron, 1930. The estimate of the income of industry
is based on the figures of the Ministry of National Economy for 1928. The
income from houses is based on taxation figures on income from houses.
40
THE DEFINITION OF NATIONAL INCOME
Hungary
1 b. Adheres to it. Defines ^pure’ national incomes total— interest of
debts to foreign countries.
6 . Excludes.
7 . Excludes.
6 and 7 are not considered to be income, but derived from wealth.
8 . Excludes.
8 a. Excludes. Gives figures for it separately, but does not add it.
Explanatory Notes:
F. V. Fellner, Das Volkseinkornmen Oesterreichs und Ungams ^ ^ 9 ^ 7 *
Personal services (doctors, lawyers, clergy, teachers, judges, officials, etc.)
are not considered to be elements of national income. Figures are given for
it but not added to national income.
Source :
Many data are taken from the Statistical Tear Book for Hungary,
Fellner also gives an estimate for Austria and uses the same method.
- Irish Free State
1 b. Adheres to it. (Income method.) •
4 . Cost of public administration is included.
6 . Includes.
1 , Excludes.
8 a. Excludes.
9 a. Includes remittances from emigrants.
9 b. Excludes charitable gifts.
10 ^. Pensions to army, police and civil officers are included; old age
pensions are excluded as transfers.
12 . (ii) Excludes.
17 a. Insurance premiums paid to companies abroad are included in the
gross total but excluded in the net total.
30 . .Net incoine=: gross income— assurance premiums paid to companies
abroad and —profits remitted abroad.
Explanatory Notes:
The estimate refers to T. I. Kiernan, National Income of the Irish Free State,
The material is based on the Census of Industrial Production of 1926
and 1929.
The evasion of income tax, the author suggests, can be estimated to amount
to 4 per cent of the income of Schedules G and D combined.
The remittances from emigrants for 1926 are assumed to amount to mn.
Pensions paid by the United Kingdom to Irish Free State residents
(ex-soldiers) are included. And pensions paid by the Irish Free State to
residents in the United Kingdom are deducted.
Italy
1 Adheres to it.
6* Includes income from urban buildings.
7 . Excludes.
THE DEFINITION OF NATIONAL INCOME
4r
8. Excludes.
8 a. Excludes.
9 a. Includes remittance from emigrants.
10 a. (i) Includes interest from Government debts.
Explanatory Motes:
The estimate is by Gonrado Gini, A Comparison of the Wealth and National
Income of Several Important Nations before and after the War, 1925. In former
publications by Gini (see list of references and Gini’s answers in our list of
the principal authors) he answers 8 and 8^ differently, ‘should be included’.
See also Leonardo Meliado, II reddito private degli Italiani, nel 1928.
New South Wales
1 a, (i) Net income of resident individuals and also (ii) income accruing
to absentees {a) from private investment and property and {b) from
investment in Government loans.
10 <2. (i) Includes interest from Government loans.
10 b. (iii) Includes old age pensions and invalid and war pensions.
15 . Includes undistributed income of local companies. .
31 . Existing data as to price levels are insufficient to enable a satisfactory
measure of comparison.
Explanatory Notes:
Source :
The Official Tear Book of New South Wales (1936/37).
Appreciable amounts of income derived by various Governments from
State lands, forests, and mines, and from Governmental business enterprises
are excluded from account.
Spain
2 a, b. Import and excise duties are included (the revenue due to the
Government on tobacco is deducted from the income of the
tobacco industry).
6. Includes. Takes 4 per cent of the value of houses as rent.
7 . Excludes.
8. lExcludes.
8 a. Excludes.
10 a, (i) Interest from internal debts of Government and municipalities
only are included.
30 . Net income = gross income — the debit of balance of payments.
Explanatory Notes:
The above reference refers to the estimate of Jose A. Vandellds, ‘La
richesse et le revenu de la Feninsule Iberique’, Metron, 1925. It refers to
the year 1913.
The income of trade !s taken as 20 per cent of the income of agriculture
and mines and 30 per cent of the industrial production.
The second estimate is given ffir the year 1923. This is obtained by a
rough estimate that the value of production increased from 1913 to 1923 in
the ratio 106 : 225.
THE DEFINITION OF NATIONAL INCOME
4f2
Sweden
In the National Income of Sweden^ by Erik Lindahl, Vol. i, p. 318, there is
a table of the national income of Sweden for the years 1930-34, giving an
estimate which has been made in the Department of Finance. It should,
therefore, be considered as an ofBcial estimate.
Lindahl points out that for this estimate the same method was employed
for the main part as was used by the Institute. Lindahl says the method
differs only in one or two points, but he does not mention the points in
question. But this difference in method has caused a difference of about
700 mn. kronor, or 8 per cent^ between the two estimates for the year 1930.
In considering these figures allowance must be made for the net contribution
of certain industries having, in this calculation, been assumed to be constant
throughout the period. Nor has, in this calculation or in that of the Institute,
any allowance been made for changes in the stocks, which in some industries
were of importance during these years.
The estimate gives figures for gross income as weU as for net income.
Soviet Russia
The estimate of the national income for the U.S.S.R. excludes personal
services, also domestic services and professional services.
It excludes services performed by public authorities. It excludes rents
of dwellings, and finally it excludes non-productive services.
This refers to the U.S,S,R, Handbook^ London, 1936. It is pointed out in
the preface: ^This book has been compiled from the latest information
received from the U.S.S.R. and our special thanks are due to the following
distinguished Soviet scientists and writers, who have kindly supplied the
material for the present volume (here thirty-two names are quoted).’
The estimate gives the national income in 1926-27 prices. The share of
the socialized sector of national economy in the national income since 1928
is shown in the following table:
Percentage of National Income
1928
44
1929
56
1930
74*3
1931
90
1932
93
1933
95
1934
96
1935
97*5
(See also Colin Clark, A Critique of Russian Statistics, I939-)
Switzerland
1 b. Income method used includes income of Swiss capital abroad.
4 . Includes salaries of officials.
6 . Excludes income of houses where the owner is- the sole Occupier,
because there is no revenue from such property.
I Compared with Lindahrs National Income of Sweden^ alternative 2,
VoL i, p. *237.
THE DEFINITION OF NATIONAL INCOME
43
8. Excludes.
8 a. Excludes.
8 c. Includes farmers’ consumption of agricultural produce.
10 a. (i) Includes loans of the State, Cantons and Municipalities.
10 (iii) Excludes pensions.
15 . Excludes undistributed profits.
12 . (i) Includes cost and lodging in return for services rendered.
Explanatory Notes:
This estimate is by P. Mori (Berne), *Das Schweizerische Volksein-
kommen’, Z^itschrift fur Schweizerische Statistik und Volkswirtschaft^ 1926.
The estimate refers to the years 1913 and 1924. The method for 1913
differs from that of 1924 in so far as the incomes of institutions are omitted
in the estimate for 1913.
Union of South Africa
1 h. Adheres to it. (All goods and services produced.)
4 . Includes Government services.
6. Houses owned by farmers included, as it is part of national income.*
The rent of farm houses for the year ending 30 June 1918 is
estimated bX £1^ mn. (The value of farm houses = £162 mn.)
7 . Excludes.
8. Excludes.
8 a. Excludes.
23 . Takes 2 per cent depreciation allowances on the value of buildings
including land, and 6 per cent on plant and machinery; for other
deductions £ i mn. is allowed.
Explanatory Notes:
Estimate is made by R. A. Lehfeidt, The National Resources of South Africa^
1922. It relates to the national income for the year 30 June 1917 until
30 June 1918.
Nearly all interest on capital invested in railways was payable to bond-
holders abroad. Incomes therefore, derived by South Africa from railways,
consisted chiefly of salaries and wages.
Another estimate was made by S. Herbert Frankel and S. D. Neumark,
‘Note on the National Income of the Union of South Africa’, The South
African Journal of Economics , 1940*
1 b. Adheres to it.
4 . Includes public services.
6. Includes.
10 Includes Union Government contribution to pension funds as well
as the pensions.
Explanatory Notes:
This estimate refers to the years 1927/28, and 1932/33 and 193^35* No
allowance is made for amounts payable overseas as interest or dividends on
public or private account or sums drawn on by South Africans from invest-
ment or income outside the Union.
* 7 to 8 per cent of the valuation of houses are considered as an average
imputed rental for urban and rural districts. Most of the houses, occupied
by the owners, have no recorded rent.
44
THE DEFINITION OF NATIONAL INCOME
United States of America
6. Includes owned' houses.
7 . Gives alternative estimates: (a) including imputed income from
durable consumable commodities, valued at 6 per cent of the
market value, and (b) excluding imputed income from this item
(apart from residential property).
8. Excludes services rendered to oneself or to one’s family.
8 a. Excludes domestic services rendered by wives.
8 c. Includes farm products used by owner, valued at the average price
at a given date.
10 Includes pensions.
12 . (i) Includes income in kind,
17 . Includes compensation for injuries.
27 . Gives two kinds of estimates (see 7 above)'.
3 1 . Five different price indices used for different classes of the population :
(a) urban manual and clerical workers, (b) farm labourers,
(tf) farmers, (d) families spending for direct goods, $5,000 annually,
(e) families spending for direct goods, $£25,000 annually.
Explanatory Notes:
The estimate refers to W. I. King, The National Income and its Purchasing
Power ^ published by the National Bureau of Economic Research, 1930. It
refers to the income for the years 1909-28. It also gives an estimate for the
same years but in terms of dollars’ purchasing power of 1913.
He excludes income from odd jobs, that is to say, jobs outside regular
duties. The term ^realized income’ which he uses is applied only to the
income of individuals and not to that of business enterprises.
See also W. 1 . King, The Wealth and Income of the People of the United States,
1915. In this book he uses the wholesale index to arrive at real income.
This estimate is based on the United States Census. The 1850-60 Census'did
not include slaves as persons, therefore the income per capita = output of
free men.
3r. OFFICIAL PUBLICATIONS
UNITED KINGDOM
HOW BRITISH AUTHORITIES DEAL WITH THE
QUESTIONS WITH WHICH THEY ARE
CONCERNED
Reports of the Commissioners of H.M.’s Inland Revenue
Reports on the Censuses of Production
Agricultural Statistics,
i b. Adheres to it.
Inland Revenue Report divides incomes from abroad to
British residents into three groups:
Group L Dominion and foreign interests and dividends paid
through paying agents in this country or received by encashment
of coupons through bankers, etc. in this country.
Group IL Income arising from business controlled in this
country but mainly carried on abroad and with assets situated
THE DEFINITION OF NATIONAL INGOxME 45
abroad, interest and dividends payable abroad (not included
in Group I) and income from other foreign possessions.
Group IIL Income arising from trading operations carried on
abroad by British concerns trading mainly at home but partly
abroad.
The Inland Revenue Report points out that Group I is
identifiable; Group II is in part identifiable; Group III cannot
be identified. The Inland Revenue Report, 1930, explains:
\ . the following estimates of the actual income of this group
(i.e. Group II) as distinct from the statutory income as assessed
have been made for the last nine years:
1920/21
Actual income
in £ 000,000
124
21/22
70
22/23
70-5
23/24
93*5
24/25
96-5
25/26
120
26/27
135
27/28
130
28/29
130
It should be borne in mind that these estimates, which are based
on annual samples of representative cases, may be subject to
an appreciable margin of error, and that they include income
arising abroad which, although chargeable to tax here, may
not be remitted to this country.’ Group III is included in
assessed income and in taxed income.
2 a. Excise duties are excluded in aggregate income method
but are included in inventory method.
2 b. The same applies to import duties.
Totals from the Census of Production in £mn.
Net Excise
(Finance
Accounts)
1923/24 126*0
1929/30 15-3
1934/33 89-8
Net Customs
(Finance
Accounts)
90*4
94-1
126*5
Total Net Output
of large firms
(Fin^ce
Accounts)
1924 1,54^'^
1930 1,505*2
1935 1.599*5
^ Excluding laundry and excise customs, but including subsidies.^
I Subsidies* in £mn.
1923/24 X5'4
1929/30 * 27-9
1934/35 28-6
They include coal-miiiing, sugar and road funds.
46 THE DEFINITION OF NATIONAL INCOME
4g, Salaries of State officials are included in Tax Schedule E.
They amounted in the year 1926/27 to 9-5 per cent of the gross
income (arising out of Tax Schedule E), and 7*2 per cent for
the year 1937/38.
5. Change in value of stocks and shares is, as a rule, not
taken into consideration; except as part of profits of professional
dealers.
6. The value for services of houses, occupied by owners, is
included. Property vested in, and in occupation of, the Crown,
cathedrals and churches, etc. is not subjected to valuation of
income tax under Tax Schedule A.
Farm houses of an annual value of ^20 and upwards which
are occupied by persons other than tenant farmers or their
farm servants are included as houses; other farm houses are
assessed under ‘lands, etc.’
7. The value for services of other durable consumers’ goods
(not houses) is excluded.
8. The value of services rendered to oneself or one’s family
is excluded.
8 a. Domestic services rendered by wives are excluded.
8^. The produce of gardens and allotments is estimated in
some accounts of the Censuses of Production, but is excluded
from the usual agricultural statistics.
According to the report on the work of the land division in
the year 1936 (quoted by the Agricultural Register for 1937/38,
Oxford, 1938), the Ministry of Agriculture and Fisheries points
out: after making due allowance for four authorities who failed
to make a return, it is estimated that the total number of
allotments in urban areas in England and Wales at the end of
year 1936, excluding railway allotments, was 606,000, covering
an area of 59,250 acres. In 1934 railway allotments amounted
to 75,887 plots on 4,677 acres both in urban and rural areas.
8 c. Produce of farms consumed by farmers’ families are
included implicitly in Tax Schedule B, as profit from the
occupation of land is equal to the annual value, with certain
exceptions, since 1924/25. Formerly they were reckoned to be
equal to one-third of the rent. In the Census of Agricultural
Production allowance is made for produce consumed on the
farms.
THE DEFINITION OF NATIONAL INCOME 47
9a, Gifts from or to persons in other countries are excluded.
Gifts may be included in balance of payments.
9b. Gifts between individuals within the country are ex-
cluded; but they are subject to death duty if a certain period
has not elapsed.
10 a. (i) Income from Government loans is included.
10^. (ii) Income from war loans is also included.
10 b. (i) Pensions and amenities are included.
10 Z?, (iii) Voluntary pensions are included as well as war
pensions.
10 (iy) (i) Contribution out of salary in the case of
University teachers, etc. is counted as income. Its addition by
employers is not counted as income.
10 (iv) (2) After their employment has ended recipients
have the choice whether to receive a capital sum or annuity.
Ajinuities are treated by the income-tax authorities as income.
It goes without saying that interest on capital sums is taxed.*
10 (v) Income out of annuities is counted as income.
11. In the case of the road fund in its early years, and
possibly other cases, distinction is made between Government
expenditure from direct or indirect taxation; excluding cases
where Central or Local Government collects payments for
services rendered.^
1 1 See answer to Question 2 a and 2 h,
12. (i) On the whole, board and lodging, provided by the
employer and which cannot be exchanged into money by the
employee, is not taxed and is therefore not included in the
income-tax assessment. Where, on the other hand, the terms of
employment stipulates that the salary is paid gross, less deduc-
tion for board or lodging (e.g. a teacher at a boarding school),
the assessment is based on the gross amount.
A house occupied rent free is assessed under Schedule A on
the annual value.
12. (ii) Income in kind, when charity, is not included as
income.
14. See No. 23.
15. Undistributed profits are included.
-1 This is a case of double taxation (see G. W. Guiilebaud, ‘Income Tax
^nd the Double Taxation of Saving’, Economic Journal, 1935).
a Such as B.B.G.
48
THE DEFINITION OF NATIONAL INCOME
16. No allowance is made for the destruction of irreplaceable
commodities; for instance^ the products of mines.
\1 a. Savings are included in actual income, but, in some
cases, income tax is reduced.
18. No allowance is made for different costs of living in
different parts of the country.
20, 21. In the Report on the Census of Production. (Cd. 6320 ,
pp. 2 i~ 34 ) ^ the national income is estimated by adding up the
value of goods produced, services and net imports. The following
table shows the various items, which are admittedly only
approximate:
Income^ 1907
Gross output of industry, mining, and agriculture, excluding
duplicates, but including imported materials to value
of ;^ 38 o mn.
Carriage, merchanting and retailing of home goods ...
Duties on home goods '
Imports ready for consumption, valued at ports
Duties on carriage, merchanting and retailing of imports ...
Subtract exports
Total value to purchasers of material goods available for con-
sumption, maintenance of capital or saving
Subtract maintenance of plant, etc. mn.) and of
consumers’ stock (;^I5 mn.)
Remainder, available for consumption or saving
Add value of personal services and occupation of houses
Add new investments abroad
Total income
1.370
430
50
220
140
2,210
465
1:745
190
1:555
375
ICO
2,030
Consumption and Savings 1907
Personal consumption: Material goods
Ser\dces and houses
Additions to capital and stock at home
Additions to investments abroad ...
Total
See also Chapter in, passim.
£mn.
1=325
375
I57OO *
230
100
2,030
22. Advertisement is treated as a cost,
23. Depreciation of goods is deducted from ‘gross total
national income" to arrive at ‘actual" national income (see
No. 29 ). Deduction for wear and tear amounted in 1926/27
I Quoted from The Division of the Product of Industry ^ 1919, by A. L. Bowley
(Appendix, p. 59). The figures were rearranged from the Final Report on
the Census of Production, 1907.
THE DEFINITION OF NATIONAL INCOME 49
to 5*3 per cent of total gross income, and 10*4 per cent in
1937/38 of total gross income from profits, pensions and pro-
fessions, etc. (Schedule D).
Flux estimated and subtracted in the Report of Census of
Production for 1937 for maintenance of plant, £175 mn., and
of consumers’ stock ^15 mn., in all :;Ci90 mn. That is roughly
1 1 per cent of the total value to purchasers of material goods
available for consumption, maintenance of capital or savings
o£ £1,745 mn.
The income tax authorities have to make allowances for the
wear and tear of plant and machinery used in trade and
industries. In most cases the allowance is made in the form of
a certain percentage of the value of plant and machinery em-
ployed in business. Any costs of repairs incurred will generally
be allowed as an expense of the firm.
The usual method followed is the annual allowance of wear
and tear, but there are cases in which allowance is given in a
lump sum. Such a renewal allowance is granted in certain cases,
when old plant is scrapped and replaced by new. (Renewal
allowances are given for certain plants and machinery used by
the railway companies.) Where such an allowance is given by
way of renewals it does not appear in the wear and tear figures
of the Census and it is a deduction in computing the profits.
See also Nos. 21 and 22.
24 . Government expenditure can be divided into ex-
penditure on goods and services and transfer expenditure. The
division of Government expenditure on goods and services into
services rendered to entrepreneurs and consumers has not been
made.
25 . Incomes of societies and other bodies are included, but
co-operative trading income is excluded. The incomes pf
charities and friendly societies, schools, colleges and hospitals
are included in gross income, but deducted so as to arrive at
taxable income.
There are some charities in receipt of profits from trading
activities (e.g. schools) which would be normally assessed under
Schedule D. Such profits would, however, not be assessed if
the statutory conditions as to exemption were fulfilled.
H. Campion points but in Public and Private Property in Great
Britain, 1938 (Chapter: Public Property not assessed for income
tax) : ' Government securities held .by charities and Government
4
BNI
50 THE DEFINITION OF NATIONAL INCOME
departments can be readily valued, and real property and
certain kinds of trading undertakings can be capitalized on
approximately the same bases as if under private ownership.
There are, however, no satisfactory methods of valuing certain
kinds of the property of state and local authorities not yielding
money income. While, it is true, as Sir Robert Giffen stated,
there is no property which ought more properly” to be taken
into account, it is difficult to find an adequate basis of valuation,
and we have been compelled to omit roads and armaments
from our estimates of public property on that account.’
Lord Stamp has estimated the value of the property of the
State and local authorities not covered by assessments for income
tax at 5^1^900-1,500 mn. in 1928 and ^1,050-1,650 mn. in 1930
for Great Britain and Northern Ireland.
In regard to charities H. Campion points out (p. 100) : 'The
total number of endowed charities in England and Wales under
the supervision of the charity commissioners and the Board of
Education is estimated at approximately 90,000.^ While this
number includes educational charities and the charities of the
London livery companies, it does not include the Ecclesiastical
Commissioners or Universities which are recognized for income-
tax purposes. Endowed charities are those entitled to property,
real or personal, the capital of which is settled upon permanent
trusts and the income only ifrom such capital applicable for
charitable purposes ’
No details are available of the aggregate investment of
Universities, but according to the Reports of the Universities
Grants Committee, the income of Universities (excluding, the
colleges of Oxford and Cambridge) from Government and
other securities has amounted to nearly £i mn. per annum in
re<ient years.
26 . No attempt has been made by British authorities to sum
up expenditure on particular commodities to derive a figure
for national income.
27 . No comparison of inventory and aggregate method has
been made by the authorities.
29 , There is complete division as far as surtax is concerned.
Earlier information gives account of exemption and abatement.
I Annual Reports of the Charity Commissioners for England and Wales
and Report of the Home Office Departmental Committee on the Super-
vision of Charities (Cmd. 2823, 1927).
THE DEFINITION OF NATIONAL INCOME 5I
In the 36th Report of the Commissioner of H.M. Inland
Revenue, for the year ended 31 March 1920, it is pointed out:
'At the request of the Royal Commission on the Income Tax
an estimate was prepared, showing for the year 1918/19 the
approximate distribution for the estimated amounts of taxable
incomes, allowances, etc., among tax-payers, classified according
to the amounts of their total incomes in each class.’
The income dealt with is income as computed for purposes
of income tax and is, therefore, in part computed by reference
to the income of the year and in part by reference to the income
of the preceding year or of an average of preceding years. The
income dealt with does not therefore correspond with the actual
income of tax-payers for the year. A table follows with income
classes of ;£‘i30-i6o, ;^i6o and over, £200 and over and £300
and over, etc. This table excludes non-personal income and
income accruing to non-residents, estimated at ^^230 mn.
30 . According to the Report of the Commissioner of Inland
Revenue four definitions are applied :
1. Gross income means income before adjustments are made
in respect to lands, houses, etc., empty property, wear and tear
of macHnery, overcharges in assessment, etc. It includes certain
income belonging to individuals whose total income is below ’
the effective exemption limit.
2. Actual income means the statutory income of the tax-
payer, estimated in accordance with the provisions of the
income-tax Acts, after deduction of the income of the individuals
below the effective exemption limit and of the adjustments
referred to under the definition of gross income.
3. Assessable income is the actual income less the earned
income allowance or, in the case of a person aged 65 years and
upwards, the age allowance granted by section 15 of the
Finance Act, 1925.
4. Taxable income represents that part of assessable income
upon which income tax is actually calculated. It is thus the
assessable income less the personal allowances and deductions.
The Census of Production (Final Report, 1935, part 3) gives
the following explanation:
Valuation of gross output equals selling value of all goods
manufactured in the year, whether sold or not*
4-2
52 THE DEFINITION OF NATIONAE INCOME
Net output results from the deduction of the aggregate costs
of materials and fuel used and the amount paid for work given
out from the total value of the gross output, minus allowance
of depreciation of plant and machinery.
Net value was defined as the actual amount charged to
customers after deduction of discounts and payments to railway
companies and other transport undertakings for carriage out-
wards.
The White Paper entitled 'An Analysis of the Sources of
War Finance and Estimate of the National Income and Ex-
penditure in 1938 and 1940 (Cmd. 6261), April 1941 ’ gives for
the first time an official estimate of National Income from the
Income (as contrasted with the Production) aspect.
In the great majority of cases the answers to the questionnaire
based on this paper would be the same as in the preceding
pages, but the classification is different from that of the Inland
Revenue Reports and is brought into line with that of Table IX,
Chapter n below. The exact relationship between these two
accounts is discussed on p. 84.
Besides estimates of income the White Paper analyses ex-
penditure and saving.
The essential statistics can be arranged asTollows:
National Income^ 1938, ^mn.
1 . Rents 352
2. Profits and interest 1,178
3. Salaries / 980
4. Wages 1,820
5. Other Income 85
6 . Total I 454*5
Total I 454*5 *
Add:
7. National Debt interest, Old
Age Pensions, Insurance
Benefits 490
Deduct :
8. Direct tax liabilities — 492
9. Undistributed profits, In-
vestment income of charities,
miscellaneous Government
income — 265
10. Total II 4,148
No. 2 includes National Defence Contributions and Excess
Profits Tax, but excludes income due to foreigners and National
Debt interest. The former are subtracted under No. 8, the last'
is added in No. 7.
Total I is then comparable with Total B, Table IX, p. 81
below.
Total II is then the aggregate of personal incomes (after
deduction of direct tax liabilities), and is available for personal
expenditure and savings.
THE DEFINITION OF NATIONAL INCOME 53
The expenditure table is in two parts, corresponding to
Totals II and I,
Expenditure in 1938 , £mn.
Food, drink, tobacco 1,648
Rents, rates, fuel, light, do-
mestic services, household
goods 959
Clothing and laundry 469
Private motors 118
Other travel 169
Other goods and services 634
Total personal expenditure
at market prices 3j997
Balance: gross personal sav-
ings 15 I
Total II
Depreciation and repairs are allowed for in lines i and 2 of
the first table.
Indirect taxes are not counted as income in Total I in the
first table, but since they are part of personal expenditure they
are deductive from Total II in the second table to obtain
Total 1 .
Notes are given in the White Paper which explain the contents
of the various items more in detail.
A similar White Paper (Cmd. 6347) was issued in April 1942.
Tjbe table on p, 52 (opposite) was modified by distributing item 5
among other items and by a new treatment of allowance for
change in value of stock (see p. 121 below); with other minor
unexplained revisions the Total I becomes mn. instead
of ^4^415
Personal expenditure 3j997
Central and Local Govern-
ment expenditure 849
Deduct indirect taxes, rates,
etc. — 643
Balance, net investment at
home and abroad 212
Total I 43415
Addendum
U.S.A. Kuznets, National Income and its composition, 1919-38
(National Bureau of Economic Research, 1941).
The same definitions are used as in 1937 (see pp. 28, 29 above),
but, owing to a revised treatment of 'net savings’ and other
revisions due to additionaP data, the totals are modified. In
Volume II there are detailed comparisons, both of definition
and of estimates, with the Department of Commerce’s and W, I*
King’s accounts (pp. 36, 44 above).
New Zealand. E. P. Neale, Recent New Zealand data
regarding the Incomes of Individuals (Economic Record, Jime 1941*
Melbourne).
Chapter IP
SOME CONSTITUENTS OF THE
NATIONAL INCOME
L MONET INCOME, 1924 to 1938
THE NUMBER OF ‘PERSONS GAINFULLY OCCUPIED*
The Population Censuses of Great Britain show in considerable
detail the numbers of persons classed as gainfully occupied at
the Census dates. For intermediate years it is necessary to
estimate them by interpolation and hypothesis.
The procedure adopted is to take the Registrar-Generals’
estimates of numbers of all persons and their age and sex distri-
bution each year, and apply to each grade the percentage of
occupied to all recorded for the year 1931. In Table I it is seen
that there have been significant changes in some of these
percentages in recent decades, and it is interesting to speculate
on their causes. For boys under 18 years, and especially under
16 years, the percentage has diminished, it may be hoped for
the reason that more continue their education or training after
16 years. On the other hand, for girls and young women in the
grades up to 25 years the percentages occupied have increased,
presumably a transfer firom ‘helping mother’ to paid work. In
other age-groups below 65 years for males and 55 years for
females there has been little change. In the higher age-groups
for females the reduction (at least between 1911 and 1921) is
due to lower employment of married women and widows. For
males the reduction is only since 1921; this is possibly due to
old age pensions, possibly to greater reluctance to employ
elderly men, possibly to changes in age-grouping within the
grades. These changes apply to the relatively less important
age-groups, while in the central grades, which include the bulk
of the occupied population, the changes have been small, and
I This chapter is a reprint of an Address to the Royal Statistical Society,
18 Jiane 1940, with some minor additions and corrections which incorporate
more recent information.
SOME CONSTITUENTS OF THE NATIONAL INCOME 55
smaller for the numerically more important males than for
females.
The age-grouping in respect of occupation is not the same
under 25 years as that in the Registrars’ Annual Estimates, and
adjusted percentages have been used as shown in the lower part
of Table I.
The Census of Northern Ireland has not been taken at the
same dates or in the same detail as that of Great Britain, but
some estimate is available every year. The numbers computed
as occupied in Great Britain have been raised year by year by
a fraction, falling from 1*0288 in 1924 to 1*0277 in 1931 and
rising a little after 1931.
Table I
Occupied Persons as Percentage of all Persons
Great Britain
n
Age
Males
Females
1911
1921
1921
1931
1911
1921
1921
14-
16-
18--
25“^
45-1
55-J
65-1
70-J
[
[ :
1
72*8
02*0
96-8
98-5
1
94*1
56-9
64-8
96- 8
97- 9{
94-9{
59-o{
64*8
91*5
96*8
97*9
97-8
96-8
90-8
79-8
40*2
63-2
89-8
96-6
98-4
98-2
96-7
gi*2
65-4
33-4
47-8
69-4
65-4
}29-3
I21-6
}ii'5
447’
66*5
28*4^
20- 1 -j
I0*0-j
f
L
r
L
r
L
44-7
yj-s
66-5
33-6
22-8
20*8
19-2
15-2
6*5
50-6
75-6
70-9
36-5
24-4
1 21-0
! 177
i 12*2
5*5
Aggregate
14-
92*7
91-8
91-8
90-5
35-4
33*7
33*7
1
1
34*2
Computed from the 22nd Abs, of Lab, Stat. pp. 2-3.
Percentages Applied to Annual Estimates of Population to
Approximate to JSfumber Occupied
Age-group
Males
Females
14-
51*6
40*0
15-
92*3
70*6
25-
98-4
36-5
35 ~
98-2
24-4
45 -
96-7
21*0
55 -
91-2
17*7
65-
47*9
8*2
§6 SOME CONSTITUENTS OF THE NATIONAL INCOME
Table II
Estimated Numbers of Occupied Estimated Numbers of Wage*
Persons (pooo^s omitted) Earners (oooo’i* omitted)
Great Britain and Northern Great Britain and Northern
Ireland Ireland
Year
Males
Females
Total
Males
Females
Total
1921
1,401
583'
1.984
1,068
401
1,469
1924
627
2,040
1,060
429
1.489
1925
i 1,426 i
630
2,056
1,068
431
1.499
1926
1.438
63a
2,070
1.075
431
1,506
1927
i 1.456
635
2,091
1,086
434
1,520
1928
1.467
637
2,104
1,092
434
1,526
1929
1.481
641
2,122
1,100
437
1,537
1930 !
! 1.495
642
2,137
1,109
437.
1,546
1931
1.519
643
2,162
1,124
437
1.561
1932
1.537
642
2,179
1. 135 !
438
1.571
1933
1.543
638
2,181
1.137
432
1,569
1934
1.549
633
2,182
1.139
429
1,568
1935
1.589
i 639
2,208
1,152
' 433
1.585
1936
1.587
645
2,232
1,163
438
1,599
1937
1.595
647
2,242
1,166
437
1,603
1938
1,613
653
2,266
1,177
44^
1,618
Estimated Distribution by Age of Occupied Persons
Great Britain and Northern Ireland
Age-group
Males
Females
1924
1931
1938
1924
1 1931, 1
1938
14-21
164
151 '
141
299
286
274
21-55
683
681 1
679
626
626
626 ^
55-65
112
122 ,
127
54 i
83
71
65-
41
48 ;
53
21
25
29
r,ooo
1,000
1,000
1,000
1,000 •
1,000
The numbers of occupied persons in the United Kingdom
exhibited in Table II have been computed by the methods
described in the preceding paragraphs/
I Dr Frankel, in an unpublished memorandum, estimates that there were
changes between 1931 and 1939 in the proportion of persons occupied at
various age-groups, namely increases both for males and females under
16 years, a slight rise for males aged 16-65 ^.nd a fall for males over 65, and
slight increases for females aged over 16. The total for males of all ages is
unaffected, while that for females Is increased by 4 per cent. The whole
occupied population in Great Britain is thus computed as 22*9 mn. in 1939,
while. Table II above, the whole occupied population in the United
Kingdom was 22*7 mn. in 1938. The effect on the National Wage Bill
might be an increase of i per cent. Dr FrankeTs estimates are based on
a close study of the statistics published in connection with National Health
and Unemployment Insurance and the Registrar-G^enerals* Reports.
SOME CONSTITUENTS OF THE NATIONAL INCOME 57
CHANGE IN AGE DISTRIBUTION
The well-known changes in the age and sex distribution of the
population are naturally reflected in the ages of the occupied.
The result is summarized in the lower part of Table IL
For both sexes the proportions under 2 1 years have diminished,
those for the central group 21 to 55 years have changed little,
and those in the higher age grades have increased.
■ Since gainful occupation diminishes rapidly among women
after the age 25, the effect of this change is shown in a slow rate
.of increase in the total occupied in the whole period 1924 to
1938, and an actual fall from 1932 to 1935, when the low birth-
rates of 1916-19 were effective.
NUMBER OF WAGE-EARNERS. EARNING STRENGTH
It is important to emphasize that for purposes of estimating
the National Income by the method of aggregating individual
incomes it does not matter much whether a person is counted
as a wage-earner or as salaried and in the intermediate group
so long as the number concerned is small, since the income in
marginal cases is much the same in the two groups. But for
purposes of estimating the wage bill we must have some
hypothesis on which to base the change in the number of wage-
earners, and obtain factors to apply to a better-founded estimate
at one date, in this case at 1931.
In my Wages and Income in the United Kingdom since i860,
Appendix E, I classify the occupational groups in the Censuses
as Wage-Earning and Others, and obtain
Percentage of Wage-Earners to All Occupied
Males Females
1921 75*5 68-7
1931 74*0 68-0
Here shop-assistants are excluded from wage-earners.
I have assumed that the fall in the percentages here shown
has continued uniformly from 1924 to 1938; e.g. the percentage
for males is taken as 75*05 in 1924 and 72*96 in 1938. These
percentages are applied in Table II to the numbers occupied to
obtain estimates of the numbers of wage-earners in each year.
Allowance is now to be made for the numbers of unemployed
wage-earners. For this purpose the usual percentages of insured
persons unemployed are averaged annually for males and*
SOME CONSTITUENTS OF THE NATIONAL INCOME
ci [rt cn O *
Sfi § g
&i|o.a 4
icoxcursokoooicooiciifiloo
O^C^COvC«S<Siftrt<i-(Th«^O^OOI>a^
'<*fkC'rJHimOkC'^fCC0CCTH'^W)v0'O
O mc<^OCD OCO o o o o o
o •-< ctto c7>J>»cr>motjD cm co
0 0 0^0 0 0 (3^00 CO CO O) O O
OinC<OC£»OCOr> OiCO CO <0^ C3^ m
O « O Wto CTiiXJJCOt^COO CO
O O O O O O CTSCO CO CO <J> O »-*
o coco <j> CO o no o CO a)C 0 cm o cm
o •-< o Ti^co'^t<r-*>-< Cjo cot^'^^ CO
O O O O O O OiOiCO CJi 0)0^0 ^ ^
CC£5 CMC£) 1-4 CM Tj4ir5CM COlO
o -4 -H o ctscooocjd Tj4 mco ^ m
O O O O C7^<7)Cr)<7)ij5(0)C7^C75C7)0 O
o w cric< 05050
o »-. o o cor^cio 'sh^coco oc m
OOO0OOC35C7)a5O5C35C75 05 0 0
O 05 O 05 CO O5C0 CO 05 O5C0 CO Cl
O 05 05 CO Cl COTO (M d lOCO « lOCO
OC3505000C75CJ505C35050000
I LOCMCO-^Cir^CM C35CD !>* CO O CO) l>"^
1 CO CO l> O CM d to o -^co d O
% CO CO CO CO CO CO CO CM d d CO CO CO rh
i d -^co i>* '(f loco 05 coco *-4 CO CO o
fXi I 05 <05(X) O O O m r>CO CO C75 C?5 O 05
CO CO CO rh CO CO CO CO CO CO CO CO
coco O r^CO dC£5 o 05Thl>*05w
^ CO COCO lot^d Tj405d m
05 <35 <05 CJ5 05 05 05C0 CO CO 05 <35 <35 O O
CO <;p d O ^cp ^ O CO CO
cb cb chcb CO w 6 65<» ^
* »
lO ^
p d p ^<o ^co d coco CO CO
w dco'^ d^io d ibcoojr^'^^^d co
t0<0 J>CO 05 O »-< d CO ''5^ lOCO x^co
SlSlS12L512L^<^<^c^<=ocococooo
<3>05C55O5<35<35a5<35O5O5<35O)05O5O5
* Adjusted from the published figures to allow for the change in the method of enumeration and for the inclusion of additional
occupations.
SOME CONSTITUENTS OF THE NATIONAL INCOME 59
females separately, with some adjustment in 1937 and 1938 to
eliminate the effects of change in the method of enumeration
and the inclusion of additional occupations (Table III).
The numbers of wage-earners thus discounted are shown as
'Employed wage-earners’ in Table III. The numbers for the
year 1 926 were placed in brackets and are subject to modifica-
tion in the sequel, for the percentage unemployed that year,
excluding as it does the men actually involved in the coal-
stoppage, does not measure the whole reduction in employment;
nor is it probable that it allows sufficiently for reduction of
work in other industries.
It is noticeable that with the increase in female unemployment
since 1936, the number at work is lower in 1938 than in 1924.
The index-numbers of wage rates used as one factor in
estimating the National Wage Bill make no allowance for change
in distribution of the labour force by sex or age or between
industries.
From details given on p. 68 below it appears that the average
wage of males under 21 years is about 45 per cent of adult
wages. It may be taken for granted that the average earnings
of men over 65 is lower than that of men aged 21 to 65, but
it does not seem possible to judge how much lower. In the
following table the effect on average wages of the change in age
distribution of males over the whole period 1924 to 1938 is shown
on various hypotheses.^ By adult wage rates is meant the average
for men aged 21 to 65; by 'elderly’ is meant over 65 years, by
'juveniles’ under 21.
Effect of Changes of Age Distribution of Males on Average
Wages (1924 to 1938)
Percentage
elderly to
adult wages
Percentage of juvenile to adult wages
40 I
45
50
50
1*009
1*007
I *006
1*012
1*01 1
1*009
80
1*013
i*ori
1*010
S5
1*013
1*012
1*012
100
1*015 '
1*014
1*012
I For example, the central entry is computed from the lower part of
Table II, thus:
141 X 0*45 + 806 X 1 4* 53 X 0*80
i64 X 0*45-f 795X 14-41 xo'8o
6o SOME CONSTITUENTS OF THE NATIONAL INCOME
The effect of the relative diminution of the young is therefore
an increase of about i-i per cent spread over 14 years.
For females the average wage over 21 years is about 64 per
cent of average adult wages. If the average wage over 55 years
was also 64 per cent of average adult wages, no correction would
be needed between 1924 and 1938. If we assume that the
average under 21 is 64 per cent of the average 21 to 65, while
over 65 the average is half that for 2 1 to 65, the correcting factor
is 1*0057, ^^5 about half that for males. The correction is
in any case so small that it is unnecessary to aim at greater
precision.
The effect of the increase in the number of male earners
relative to female is of more importance.
I Write Aw for the average wage of females, where w is that
of males.
Write /for the index-number of wages, allowing for no change
in age or sex distribution.
Use the figures for employed wage-earners in 1924 and 1938.
Then a little consideration will show that when changes in
sex and age distribution are taken into account, we should have ,
for the change of the National Wage Bill from 1924 to 1938:
1,014 X I *01 1 “h390x I *006^^
943 + 392^
insttadof
943+392^
k is known to be in the neighbourhood of 0*5, and the ratio of
these two fractions hardly changes as k varies from 0-45 to 0*55.
The first fraction is nearly i *4 per cent greater than the second,
and this is the whole increase to be applied over the period to
allow for increased earning strength.
To obtain an index of earning strength we have therefore to
increase the total numbers of employed wage-earners (Table III)
progressively about o-i per cent per annum, and it is not
worth while to try to adjust this regular progression. This having
been done the column is transferred to the base 1,000 in 1924
to give the index of earning strength in Table III/ ‘
THE INDEX OF WAGE RATES
In Table III are given two index-numbers of wage rates:
Ai that computed monthly for the London and Cambridge
1 For example: the figure for 1938 is 1,000 x 1,404 x 1*019“ 1,335 =:»i'o72.
SOME CONSTITUENTS OF THE NATIONAL INCOME 6l
Economic Service and explained in detail in Memorandum 28
of that Service; Bj that published by the Ministry of Labour,
and discussed by Mr Ramsbottom in the paper to the Royal
Statistical Society (1935, Part IV) and brought up to later dates
in the Journal^ 1938, p» 202, and 1939, p. 289. The structure of
these numbers is well known. depends on a wider range of
industries than does and it is adopted in the sequel. It is
remarkable that they march closely together and are nearly
identical in 1937 (compared with 1*924).
Both index-numbers are on the basis of unchanged numbers
and age and sex distribution and should therefore be applied
to the index of earning strength to obtain an index of the
National Wage Bill, not to the unadjusted numbers of
earners.
They also neglect any change in the relative importance of
industries. I have examined this effect in my Wages and Income,
pp. 107-10. From 1924 to 1931 it is negligible, and from 1931
to 1935 the computed effect is an increase of under i per cent
in the industries covered by the Census of Production. But
when mining and agriculture are included there may be some
modification. I have combined this change with the more
important adjustment that I proceed to discuss.
' Tt is clear that index-numbers which depend primarily on
changes of time and piece rates do not necessarily give an exact
measurement of earnings. For apart from complete unemploy-
ment, for which allowance has already been made, there are
facilities for increased earnings on piece and for overtime and
less broken time, when industry is prosperous. Further, it is well
known thfet an arranged change in piece rates is not necessarily
proportional to the corresponding change in earnings. These
relationships can be tested by the general returns of earnings
published by the Ministry of Labour for 1924, 1928 and 1931,
supplemented by information regarding coal-mines, railways
and agriculture. On the basis of thesfe data I estimated average
earnings for males and females separately in my Wages and
Income, p. 51. It remains to combine these by the help of the
numbers of occupied wage-earners.
Here the index-numbers first given are proportional to
average earnings; B^ is that firom Table III, and B3 is
adjusted for the greater change in ‘earning strength’ than in
numbers occupied, a change which has already had its effect
on the estimates of average earnings.
62 SOME CONSTITUENTS OF THE NATIONAL INCOME
Average Earnings
Year
Males
1 Females
1 All wage-earners
Num-
bers 1
(ooo’s)
Aver- :
age
Num-
bers !
(ooo’s)
Aver-
age
Average
Index-
numbers
B3 .
1924 ;
1931 :
1935 1
943
870
949
54.45.
53'7^*
54*7-f.
392
i 359
39 J
27-5^.
26-95.
"27-35.
46-5^.=
45 - 9 ^- \
46- 7s.
100-0
98-7
100-5
lOO-O
96-5
95-5
1 00-0
97-0
96-3
We find then that earnings of employed wage-earners had
decreased rather less than rates between 1924 and 1931, and
increased between 1931 and 1935, when rates dropped.
We can make a rough test of the relation between wage rates
and earnings by comparing the details of Mr Ramsbottom’s
index with records of earnings in eight industries, viz. Cotton,
Wool, Boots, Bricks, Pottery, Goal, Railways and Iron and Steel
Production, The first five depend on the statistics of numbers
employed and earnings, given monthly in the Ministry of Labour
Gazette. For this purpose the average earnings shown each
November, as compared with those a year before, have been
computed for comparison with Mr Ramsbottom’s December
figures. For Coal the average earnings per shift in the fourth
quarter of each year are taken; for Railways the annual report
on earnings for March or April each year; for Iron and Steel
Production the annual earnings as computed by the Iron and
Steel Institute. There are many minor and some more important
difficulties in making the comparison, and it does not seem to be
worth while to do more than give rough averages (see Table IV) .
The series of general averages agree so closely till 1932 that it
seems best not to modify the original index-numbers in Table III
prior to 1934; but in the years of improving trade adjustment
seems to be justified. The industries selected probably contain on
the whole a larger element of piece rates or greater opportunities
of overtime (in the case of Railways) than do industries in
general, and a smaller increase than that suggested by the
figures here is probably justified.^ The following paragraphs
throw some, light on the problem.
I In Table IV it is noticeable that from 1935 to 1936 the general averages
earnings increased less than rates. It appears from more detailed records
that rates were raised at a later stage in the period of improving trade than
the increase of earnings, as indeed we might expect.
Table IV
Index-numbers of Approximate Earnings (E) compared with Constituents of Wage Rates Jlumbers B for December
SOME CONSTITUENTS OF THE NATIONAL INCOME 63
r-lt« HlUJrHlel |
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o o <T) 0 :i 05 <jjaicna)cr)cn
O o r^oo cn t^oo w CO |
0 0 0^0) cnoo CT) o) cn o o
o 100 o oc£> cr>cic£) oc
o cn a> CD cnco co cn cn ^
CT) CO (M r^oo »-< CO CO
cncncnoo cn^^ o
w oofiDcocorrio muo cn cn
^ PQ o o Cl cn cn cn cn cn cn
03 l- M j
ocoorcioioiox^cnotio
W ooooocncnaicnoo
^ o cn !>• to rjh »
PQ o cnco cocooococo cnoxn
o I i^-r^oo r^r^oo mcoco
O ODCOCOCOOOCO 0^0 o
O O O O ^ toco o o
0000 cncnooia^o o
o o CO coco cn mo cn
o « o o cnco cn 05 cn O) cn
00000000000
oco moo m'^<o cncoo
O on cn cnco on cn cn o o
o coco coco coco*-* CIO cn
o o o>ocnoicncncncno^
o ^ CO o 03 mco t>* •-<
o o 00 oicncncnooo
o o o cn»-* '«j<ci<Nf 0 ^O 5 cn
000 Oi cnoo CO CO 03 CO CO
coo <N comcf mcno mco
0000 Oiocncno cno
O O O o N
o o o cn cnco 00 00 co <n cn
o o o'-^^moo o>»^coo
0 0)0 cnco CO CO 00 o> cn I
'^ooo cno or xihmco r^co
or or cr ct co co co co co co co
ocnocnoxncncncncncn
64 SOME CONSTITUENTS OF THE NATIONAL INCOME
THE WAGE BILL AND INCOME TAX, SCHEDULE D
There is a close relationship between the computed index-
numbers of the Wage Bill and 'Actual Income' under the
Income Tax, Schedule D. The data for the years 1924 to 1935
are given in Table V and in the accompanying diagram. 1926
is omitted from the computation, since the average number of,
occupied wage-earners in that year is doubtful.
Table V
Wage-Bin Index and Schedule D
X, Schedule D. Actual Income ;^^mn. x x 1925/26 placed under
1924, etc.
F, Index of National Wage Bill. 1924= 1,000. o o.
r' = 4364-o*57X-h4-6^, where t is nujnber of years after 1930.
_ 1 Wage-Bill index estimates computed
Schedule D 1 from formula
Year
Actual
income
(;CXmn.)
Year
r
Y '
Y \
1925/26
LO33
1924
1,000
995
1,004
1926/27
1,064
1925
* LOI5
1,017
1,021
1927/28
1,013
1926
—
993
996
1928/29
1,065
1927
1,040
1,027
1,024
1929/30
1,078
1928
1,016
L039 i
1,032
1930/31
1,032
1929
1,020
J5018 !
1,010
1931/32
922
^930
968
959 i
95 ^
1932/33
802
1931
897 1
8g6 1
896
1933/34
756
1932
879
1 874 ;
874
1934/35
829
1933
896
920
912
1935/36
858
1934
949
94 ^
928
1936/37
944
1935
1,005
995
973
By the usual method of partial correlation, in which the effect
of the time element is separated, we obtain the equation
F=436-f o-57X-i“4-6^, ±12,
where F is the wage-bill index, £X mn, is the actual income in
Schedule D* and t is the number of years measured from 1930*
The mean square deviation of T' as computed from Y the
given index is approximately 12, or 1*2 per cent:
The fit of the computed line {Y') to the given line is very
close from 1929 to 1934.
Y* is computed from values of Y raised in 1934 and 1935 on
a priori evidence that earnings increased more than rates.
^ The assessment of, each year, e.g. 1925/26, is compared with the Wage
Bill of the previous year (e.g. 1924).
Wage-Bill Index and Schedule D
1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935
X, Schedule D. Actual Income x x 1925/26 placed xmder
1924, etc.
Y, Index of National Wage Bill. i924==niooo. o o.
y'=436-h3*57X+4*6^, where t is number of years after 1930.
See p. 64
SOME CONSTITUENTS OF THE NATIONAL INCOME 65
If, however, we use the original values of B2 in these years,
we obtain a modified equation
Fi = 490 + 0-505Z -f I -agt.
Neither equation should be regarded as representing a per-
manent relationship between the Wage Bill and Schedule D.
Different periods of years yield different coefficients. But a
close relationship between the movements is demonstrated, and
explanations may be sought in years where the divergence is at
all considerable.
On the evidence of these figures I propose to adopt the
number 993 as the Wage-Bill index for 1926,
For the years 1934 to 1938 the evidence is somewhat con-
flicting.
Using a provisional estimate for Schedule D for the year
1939-40, we have alternative estimates as follows:
Estimates of Wage-Bill Index
Year
A2 1
B 2
!
Adopted
* 1934
939 i
934x1-016= 949
941
928
950
1935
978
973 X 1-036= 1,008
995
973
1,000
1936
1,04a 1
i,039x 1-034=1,064
1,048
1,019
1,060
1937
I, no
1,109 X i'Oi8= 1,129
1,082
1,044
1,120
1938
1^132
1,135 X 1-018=1,155
1,087
1.045
1,130
Here the multiplier applied to B2 is obtained by assuming that
the general excess of the movement of earnings over rates is half
that indicated by Table IV. For 1935 the excess is in the same
proportion as that indicated by the Wage Census (p. 62 above) .
During the time of expanding employment, 1935 to 1937,
the wage index-numbers show a stronger movement than does
Schedule D, and are I think to be preferred.
In 1938 there was a reaction in industiy and employment, and
it would be anticipated that the factor to be applied to Bg would
be less than unity, but the tendency to increased wage rates was
continued.
From these considerations I adopt the figures shown in the
last column with considerable hesitation.
The results are shown under D in Table HI.
For completeness at this stage the Wage-Bill index is applied
to the estimate of earnings in 1931 discussed below and the
results are shown in the last column of Table III. So far the
earnings of shop-assistaiits are excluded.
BNI
5
66 SOME CONSTITUENTS OF THE NATIONAL INCOME
It is interesting to compare the estimate for 1924, here
/lAQismn., with that made in The National /wcome, 1924
(Botky and Stamp), which (excluding shop-assistants) was
Si 48o^mn. The present estimate is based pnmarily on repor s
fn SrnS^s in 1931, worked back by index numbers of wage
rates and earning strength. The earher the
the Wage Census of 1906, worked forward by estimates ot tne
occupied and employed population, and wage indices computed
"aSrfrom the Wage Retmns of 19.4, but
sources. A possible error of ± 5Per centwas jiggestedfor W-
very remarkable that the two estimates differ by
The whole series from 1924 to 1931 about i per cent ^
)S4igs indMd of the number occupied for 1936 ^es the
newecLate . P- cent lower .Kan dr. odmhy^
Sincetliataatemeivxuii=>Lxy ------ — iT
of earnings in October 1938 {Ministry of Labour Gazette, 1940,
^^meVGrouM IV to XVI (excluding Railways) and Local
Government (XVIII) are combined from Table VII, below, we
get asnearly as possible the industries included in the '
The average weekly earnings thus computed for 19^ are 48 is.
From the W Bill (D) and the number of employed wage
earners in the table, the increase in average earnings, 1931 to
1938, is 10-5 per cent. Apply this to the average for 1931 and we
^^Whe^the Ministry of Labour’s figures are weighted by the
number of insured workers in- the Industries, the average in
^ S^dose^n a^Jreement is partly accidental, since vanous
doubtful factors are involved; but it confirms the general
accuracy of the estimates here used.
note on wages of juveniles
There is need for a systematic, study of the rates ^
boys, girls and young persons up to the age at wMch fuU adu
rates are received, and indeed of the profession of
for younger adults when the maximum is not reached till ^_ter
sLe yeis of experience. I have put together the da a relating
to the subject ‘m Standard Time Rates and Hours of Labour, 1Q29,
SOME CONSTITUENTS OF THE NATIONAL INCOME 67
a publication which was kindly annotated for me at the Ministry
of Labour in connection with another investigation, so that
most of the figures used apply to the year 1937.
The table and diagram given should be regarded as the
results of only a preliminary and rough investigation, the main
purpose of which was to estimate the effect on ^earning strength’
of the relative falling-off of young earners.* On any reasonable
hypothesis that effect was found (pp. 60, 61 above) to be trifling.
The averages in Table VI are simple averages based on
262 entries for males (including 49 for Agriculture) and 128 for
females. The entries are not distributed in accordance with the im-
portance of industries, but nothing appeared to be gained by any
system of weighting; one which I applied did not affect the result.
Table VI
Juveniles^ Weekly Wage Rates ^ 1937
(shillings)
Age
1
1 '5
16
Males
17
i
1 19
\
1 20
1
1 21
Bricks, chemicals
13-1
15-8
ig-i
23*2
28-9
34*i
39*3
—
Metal, engineering
1 1*2
13-4
15*9
19-4
^^5*3
29-8
34*3
—
Textiles
1 1*3
13-2
16-7
20*9
26-3
31*1
36*2
—
Clothing
11*4
19*5
24*1
29*0
32*9
35-8
—
Boots (minimum)
12*0
i6*o
20-0
25-0
30*0
36-0
44*0
—
Food
12*6
14-7
17*6
21*5
27-5
33*9
42*0
—
Wood, furniture
—
15*5
17*1
25*6
34-1
41*5
—
Paper, printing 1
1 1-3
15-0
19*2
24*4
30*2
36-4
44*5 ^
:
Building, artisans
9.8
11*3
14-2
17*2
21*5
28-5
40*8 '
—
„ labourers
1 14*4
14-4
21*5
21*5
28*7
28*7
43*1 1
—
Transport
i6-o
i6*o
20-0
25-0
30*0
35*0
—
Distribution
12*1
14*6
18*4
23-0
28*7
36*1
42*5
—
Agriculture*
11-2
13*9
16*8
20*4
^3-9
26-6
29*0
Miscellaneous
—
15*2
1 8-0
22-6
28*6
34*2 1
39-8
General average
I 2 -I
14-3
i8-o
21*8
27-4
327
1 39-0
^ —
Females
Chemicals
1 1*8
13-8
16*1 i
19*4 i
22*2
24*2
26*0
28*1
Metal, engineering
10*5
12*3
14*6
17-2 !
22*0
24*6
25*2
25*3
Textiles
10*8
13*4 1
1 6*4 !
20*1
24*0
26-3
27*9
28*5
Clothing
i lO’I
13*0 1
17*0
21*1 1
257
28-3
30-6
31*8
Boots
1 12*0
i6*o 1
20*0
25*0
30*0
30*0
30*0 !
30*0
Food
1 11*8
14*7
i6-7
20*9
24*5
27*3
29*5
Furniture
1 10*7
12*8
i6-6
21*9
29*0
33-8
38*6 1
38*6
Paper, printing
8*9
11*4
15-9
22*3
25*6
27-3
29*0 !
31*6
Distribution
. 10*2
12*4
15-1
1 8*2
23*1
26-9
30*2 i
32*7
Miscellaneous
—
11*8
14-4
18*1
22*4
25-5
1 29*0 ;
30-9
General average
10-6
13*2
16-3
20*4
24*9
27*4
29-6
31*1
* In the year 1933.
5-2
68 SOME CONSTITUENTS OF THE NATIONAL INCOME
There is considerable variety in the upward steps in wages
year by year in different occupations, and there is often a
distinction between apprentices and others. On the whole the
statements confirm thu general impression that in unskilled
male occupations wages start higher, increase at first more
rapidly and reach their maximum at an earlier age, than in
skilled occupations. In the latter the wage at 20 years is
considerably below the standard rate for adults, and it appears
that there is a sudden jump at the age 2 1 .
From the table and diagram it is seen that girls start at nearly
the same rates as boys, but make slower progress especially after
1 7 years of age, and by the time they are 2 1 are usually receiving
adult wages. The actual age at which adult rates are payable
varies from trade to trade.
The dotted lines in the diagram are intended to indicate
progress towards an average adult wage of 55^. to 605. for men
and 33^. to 36^. for women.
The general averages for females agree closely with those
recorded in the New Survey of London Life and Labour^ Vol. vi,
pp. 82-4. There earnings in factories, workshops, etc. average
13^. 6 d. at 14 to 16 years, i 8 s. 6 d. at 16 to 18, 25^'. 6 d. at 18 to 20,
30^. 6 d. at 20 to 25, and 33^. 6 d. for all ages 20 to 65. It might
have been expected that London wages would be higher than
provincial, but the figures here assembled do not support this view.
TOTAL WAGES IN 1931
The Popujatibn Censuses of England and Wales and of
Scotland in 1931 and that of Northern Ireland in 1926, together
with some subsidiary information, enable us to classify gainfully
occupied persons as follows :
United Kingdom, 1931
(ooo’s)
Males
1 Females
Totals
Wage-eamers
Shop-assistants, etc.
Salaried and employers in Agriculture
Others
Workers on own account
9=035
606
215
2,548
965
3.793
494 :
20
1,211
12,828
1,100
235
3.759
1,326
Total
Unemployed
13,363
2,014
5,879
575
19,248
2,589
Total
15,383
6,454
21,837
SOME CONSTITUENTS OF THE NATIONAL INCOME 69
In this total is included an estimate of the number of fishermen
and seamen absent on Census night, and some other slight
modifications are made which result in a greater number of
wage-earners and a greater total than in Table III.
In the present section shop-assistants are distinguished from
other wage-earners and subsequently from the rest of the
salaried group, since the various sources of information about
their earnings do not allow any clear distinction in their case
between manual operatives and salaried or administrative.
For weekly earnings we depend primarily on the returns for
"^Average Earnings in the Principal Industries in Great Britain
and Northern Ireland’ in the week 1 8 to 24 October 193X5
summarized in the Ministry of Labour Gazette^ 1933 (pp. 8, 45, 82) .
These, when supplemented by the periodic returns of coal-
miners’ earnings, cover the Industrial Groups III-XIV in
Table VIL Other sources are used for agriculture and railway
earnings. For domestic servants a small special investigation
was carried out, which gave sufficient information to allow of
a fairly reliable estimate. For other occupations we depended
on known wage rates for particular occupations or for the class
of labour employed. Allowance was made for the value of
board, lodging and clothing in the cases where it was relevant.
In the main group covered by the Ministry of Labour’s
returns there were in some cases difficulties in judging the
relative importance of firms employing less than ten persons
and of larger firms, for which the returns were separately given.
In all cases there was a little doubt whether the returns, which
were on a voluntary basis, were closely typical of the whole
industries.
The total numbers of male and female wage-earners in
Table VII are those given above from the Census of 1931 sub-
divided into XXII groups, with sub-groups. The annual earnings
were obtained by the application of two assumptions. First
some reduction must be made from the Census numbers, since
persons away from work through sickness or other interruptions,
as well as those temporarily stopped, or changing firom one
employer to another, would not necessarily record themselves
as unemployed — a term which they might regard as seeking
employment. On p. 103 it is shown that there is a perceptible
deficit, attributable to the category ‘temporarily stopped’, and
the usual estimate for absence through sickness is about 3 per
cent. On these grounds the numbers of earners are decreased
Table VII
Estimate of Earnings and of Salaries under per annum in 1931
w crco>-i »-< ^cp M '^cc Oi ^ ^
666666 >^6 wmw6w666 '^66 wco66
o ococ£>to t^o (N f^co Tj-'iocMOfac'fincoooo
CO CO CO CO CO iT^co jc^to i>* i> r^co r^co cr.co
o o Loiotniomo o o o mocooococo o o lo-^o
coco i>- f^co ^ CO CO CO CO Of-'CO co co co co rococo to
w ox^r^w i-^cocp ipco wcpco^-^co
6 6 ^ 6 cO^ coco CO CO f-v CO CO
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XI, Wood, furniture
XII. Paper
Stationery
Printing
XIII. Building, contracting
XIV. Rubber
Other manufactures
XV. Gas, water, electricity
XVI. Railway transport J
Road transport
Other transport
XVII. Distribution
Banking, etc,
XVIII. Defence'
Central Government
Local Government
Police
XIX. Teachers
Nurses
Professions
Others
XX. Entertainments, sport
XXI. Personal service
XXII. Other
Total
* Employers (farmers) are excluded from the agricultural numbers,
t Including fishermen^ sailors and soldiers at sea or abroad.
X Including railway shop and artisans as does the Population Census here and not in Group VI.
§ In Wages and Income^ pp. 22, 51, 1 13, 45-2^. is taken as the average for 52 weeks, while here it is 49*0.?. to be multiplied by 48 for
annual earnings.
72 SOME* CONSTITUENTS OF THE NATIONAL INCOME
by 4 per cent before applying them, to the weekly earnings.
Secondly, statutory and other customary holidays amount to
about two weeks per annum, and in 1931 at any rate they were
paid in few cases, so that 50 weeks’ work is to be attributed to
the reduced numbers.
We thus have: Numbers of earners x x 50 ( = 48) x weeks’
earnings = annual earnings, so that the actual numeration in the
table is the multiplication of numbers, weekly earnings and 48,
This factor 48 is, of course, not to be considered as exact,
but the error resulting can hardly exceed i per cent for 1931.
But in the most recent years the factor should perhaps be
increased to 48 1, or even 49, since payment for holidays has
become wider spread.
The whole of the data were treated independently by Mr
Booker and myself. His first estimate of the total was 3I per cent
below mine; of this difference {£4.J mn.) mn. was due to
coal-miners’ earnings, where I found evidence of a higher
average number of shifts, mn. to his use of minimum rates
(instead of earnings) in agriculture, £1^ mn. to an allowance
for deficiency in the returns from small building employers,
where the earnings were at lower rates than in larger firms,
and the remaining £14. mn. came from a number of industries,
and principally from the assumption that small firms were
insufficiently represented. I have not had the opportunity of
collating these estimates with him completely, but I think that
we would agree to at least half of my additions, so that we might
write the total wage bill at £iy^^o ±10 so far as this
variation of estimate is concerned. In this paper, however,
I have taken the higher quantity, 1,340 mn., as the principal
estimate.
Apart from this difference of interpretation of the data there
is the possibility of small errors in every factor and estimate
involved. These are independent of each other and tend to
cancel out, and would in that case give a margin of some
I per cent or less in the total.
Another consideration is that the earnings returns are for one
week in October, and may not be applicable as the average of
the year 1931. Actually changes in wage rates were very small
during the year, and the fluctuations in employment were not
such, as to lead us to expect any important difference in the
relation between earnings and rates, when October is compared
with the whole year.
SOME CONSTITUENTS OF THE NATIONAL INCOME 73
There is, however, the further consideration whether the
number recorded in the Census as employed in April was equal
to the average number employed during the year. Among
insured persons the percentage unemployed was 20*4 in April
and 21-3 as the average for 1931 (21*9 in October), so that the
percentage not unemployed was 79*6 in April and 78*7 for the
year. But the insured population increased by 3 per cent during
the year, and the number of insured persons employed was very
nearly the same in April as the average for 1931. In the occu-
pations outside insurance the relationship may have been
different, and on the whole it seems best not to adjust the main
estimate, but to realize that here is a further error of less than
I per cent. It may be added that various systems of weighting
the separate returns within the total have been tested, and that
they give very nearly the same results.
The White Paper issued by the Financial Secretary to the
Treasury in April 1941 (‘An Analysis of the Sources of War
Finance and an Estimate of the National Income and Ex-
penditure in 1938 and 1940^) estimates wages (including
payments to armed forces and earnings of shop assistants) at
1,820 mn. in 1938. It is learnt that ^^54 mn. was attributed
to shop-assistants, as on p. 81. Other wages {£i^j 66 mn.) were
computed by taking the numbers employed on the same
principle as in Table III, p. 58, deducting 3*5 per cent for
sickness and unpaid holidays, thus following the Ministry of
Labour’s allowance for loss of time through ‘sickness and other
forms of unrecorded non-employment apart from recognized
holidays’. After a trifling allowance for days lost through trade
disputes had been made, the remainder was multiplied by
average earnings based on the Ministry of Labour’s enquiry (as
above) supplemented by other information, and modified by
minor adjustments. This ^1,766 mn. is 4*4 per cent higher than
the ;iri,690mn. in Tabk III, which is intended to cover
precisely the same ground.
Since the average earnings corresponding to Table III of all
employed has been shown above to correspond very closely with
that based on the same data as are used in the White Paper, the
difference must be sought in estimates of the number occupied
and the number of weeks worked per annum. While 5 per cent
is allowed in the White Paper for absence from all causes, so
that 49*4 weeks at earnings is allotted per annum, the estimate
in Table III allows 4 weeks’ absence and 48 weeks’ work. This
74 SOME CONSTITUENTS OF THE NATIONAL INCOME
accounts for 2*9 per cent of the difference. The remainder is
I *5 per cent. Part of this may be due to the increase of payment
during holidays; if one-third of the wage-earning population
was paid during one week’s holiday, the addition to the National
Wage Bill would be o-6 per cent. This reduces the unaccounted
difference between the estimates to about i per cent.
Considering that the earlier estimate was built up from the
data of the year 1931 by index-numbers, while the latter is
the result of independent work on the 1938 wage returns, the
agreement is very satisfactory.
After studying all the factors it seems reasonable to regard the
estimates of the total as subject to an error of less than 5 per cent.
It is thought that the figure for 1931 is more likely to be over-
than under-estimated, while that already given for 1938 is a
central result.
Thus the Total National Wage Bill, excluding shop-assistants,
may be written as between ;^i,28o and ^^15370 mn. in 1931 and
between ;^i,630 and mn. in 1938.
SALARIES BELOW THE INCOME-TAX EXEMPTION
LIMIT
As in the years 1911 and 1924, a direct investigation was
made into salaries by questionnaires issued to employers. We
were successful in obtaining a great deal of information, and at
least for the purpose of Table VII, which is to obtain the total
of earned incomes other than wages below the exemption limit
the returns were sufficient.
In the computation which leads to the total {fyo mn.) there
are a very large number of independent estimates of percentages
and averages, and so fir as these are concerned the majority of
the entries are unlikely to be more than 10 per cent in error and
the total should be correct within 5 per cent. But there is some
doubt about the numbers to which these percentages should
be applied. The columns .headed 'Numbers All’ include the
entries in the Population Census under Employers and Managers
(except in Agriculture), as well as estimates of the numbers of
non-manual operatives, and it is doubtful how far the returns
to the questionnaires included the superior group. Also in some
cases there were included rather arbitrary estimates for quite
small employers. Taking all these uncertainties into considera-
tion, we may with some confidence write the total as between
£80 and ;^ioo mm, keeping 5^90 mn. as the most probable
SOME CONSTITUENTS OF THE NATIONAL INCOME 75
estimate. This margin includes an allowance for the small
variation of salaries (p. 92) between 1931 and 1938. Since
salaries were rather lower in 1931 than in 1938 (the year of
computation), ^^90 mn. may be a little too high.
Of course we have not in this table the material for computing
average salaries of all employed, but only the average of the
lower 17 per cent of the men and the lower 62 per cent of the
women. Since the men include beginners preponderantly, while
the women include many who have reached their maximum,
it is not surprising that the average in these sections is greater
for women than for men.
The numbers of those with small salaries are not stated in the
table, to save space. The last line may be written :
Under £12^ per
annum
Average
Aggregate of
Numbers
salary
salaries
(ooo’s)
{£)
{£ mil*)
Males
448
73
33
Females
746
77
57
Total
SHOP-ASSISTANTS
I5I94
75
90
It will be seen in the sequel that when the aggregate number
of incomes is to be estimated, it is necessary to know what
employees are classed as "weekly wage-earners, employed by
way of Manual Labour’ and are assessed on a half-yearly basis.
Unfortimately neither the instructions nor the practice are
clear, as regards employees in shops. Shop-managers, shop-
walkers, window-dressers, are given as examples of occupations
"not regarded as manual’, while working dressmakers are
"regarded as manual’. Counter-hands are not named. The
covering definition is: """Manual Labour” includes all occu-
pations which depend mainly on the exercise of physical
exertion, even though a considerable amount of dexterity and
training may be involved.’
We have found on enquiry that some distributors include
all shop-assistants in their general return to the income-tax
authorities, merging them with clerks, etc., while others include
them in the special return relating to manual labour.
As a compromise it has been decided jEbr the present purpose
to assume that the number of shop-assistants receiving less than
3^^125 per annum^ — ^approximately weekly — ^is equal to the
number returned as manual labourers, and that the remainder
76 SOME CONSTITUENTS OF THE NATIONAL INCOME
are included among the number assessed on an annual basis for
income tax.
We have received reports that cover 125,000 shop-assistants —
that is, about 12 per cent of the number so classed in the Census
of 1931 — and the numbers and average salaries of those receiving
less than £12^ per annum in 1938.
Salaries of Shop-assistants in 1938
Males
Females
Percentage under 7^125 p.a.
39
89
Average salary :
Under ^^125
=^78-3
or more
£189
£162
AH
£139
£87
It is quite possible that the returns, which came from large
distributors, do not contain a sufficient proportion of quite low
rates for young girls, and that the average (about 355-. weekly)
for all females is too high. I have reduced the average under
£12^ somewhat arbitrarily by about 10 per cent in the estimates
that follow.
Our returns indicate that salary rates were nearly stationary
from 1924 to 1936, that they rose 2| per cent in 1938 and a
further i per cent in 1939/
From this information we have to deduce the proportions and
average salaries under £12^ in 1931 and subsequent years, and
under :^i50 from 1924 to 1930.
As regards the numbers concerned, we have from the Popu-
lation Census :
Salesmen and Shop-assistants
(ooo’s)
Males Females
Great Britain, 1921 352 41 1
» 1931 51 1 4S4
Northern Ireland, 1926 ii 9
The statistics of insured persons under the heading Distri-
bution’ have a wider content, especially of males, many of
whom are presumably drivers and porters.
Insured Persons i Distribution
(ooo^s)
Great Britain and
Northern Ireland Males Females
1924 808 544
1931 i>i 37 738
1939 1^282 814
I See Mr Campion’s paper, p. 92 below.
SOME CONSTITUENTS OF THE NATIONAL INCOME 77
The increase here is much more rapid than that shown by the
Census. In the sequel I have taken the Census figures with a
uniform rate of growth from 1924 and 1931, and assumed an
annual increase of i per cent from 1931 to 1938 and no change
in 1939, since the Insurance statistics indicate stationariness.
The change in the income-tax exemptions limit, the movement
in rates of salary and the correction for the presumed over-
estimate of women’s salaries affect the proportion and average
rates below and above the exemption limit. After trying various
hypotheses I have provisionally adopted the estimates in the
following table.
Table VIII A
Shop-assistants
Estimates of factors involved
Limit £150
Limit £125
Year
1924
1930
1931
1936
1937
1938
1939
Ma
es
'
Total number (ooo’s)
409
505
521
546
551
558
538
Below limit:
Percentage
50
50
42
42
39
39
39
Number (ooo’s)
204
252
219
229
215
218
218
Average salary {£)
80
80
62
62
6i*4
6i-4
61-4
1
Fern:
i
iles
1
I
Total number (ooo’s)
443
485
493
498
1 503
508
1 50S
Below limit :
Percentage
95
95
91
91
89
89
39
Number (ooo’s)
421
462
449
453
447
452
452
Average salary {£)
75
, 75
72
72
70-7
707
707
Between 1924 and 1930 and again between 1931 and 1936
uniform progression in numbers is assumed. Allowing for the
change in salaries after 1936 and as the result of some trouble-
some approximations, the estimates shown in Table VIII B are
obtained.
These estimates should be regarded as subject to margin of
error of ± 10 per cent throughout.^ In particular some modi-
fication is probably needed to allow for the changing stress of
unemployment.
I In Wages and Income^ p. 77, the estimate for shop-assistants was £120 mn,
in 1924, £100 mn. in 1931^ and 3£’i2omn. in 1936. These figures include
some distributors who were not shop-assistants; and assumed (in the absence
of evidence to the contrary) that the movement in salaries and unemploy-
ment was parallel to that in wage-rates.
78 SOME CONSTITUENTS OF THE NATIONAL INCOME
Table VIII B
Shop-assistants^ Nmibers and Aggregate Salaries
Male and Female
Year
Number (ooo’s)
Aggregate salaries
(£mn.)
Add
rounds-
men
wages
to small
salaries
(£ nm.)
Under
;£150
£150
and
over
Total
Under
£150
£150
and
over
Total
1924
625
227
852
48
43
91
57
1925
640
235
875
50
44
94
59
1926
653
243
898
51
45
96
60
1927
670
251
921
52
47
99
61
1928
684
260
944
53
48
lOI
62
1929
699
268
967
54
50
104
^3
1930 1
714
Under
£125
276
£is5
and over
990
55
Under
£125
£125
and over
107
64
1931
668
346
1,014
46
64
no
55
^932
671
349 1
1,020
4^
65
1 1 1
55
1933
674
352 1
1,026
46
66
112
55
1934
355 i
1 1,032
46
67
”3
55
1935
600
35S j
1 1,038
47
114
5^
1936
682
362
1 h044
47
67
114
5^
1937
662
392
1 1^054
45
73
118
54
1938
670
39 ^
1,066
45
75
120
54
1939
670
396
1,066
45
76
121
54
In the table on p. 68 the number classified as shop-assistants
is I5IOO5OO0; the excess of 86,000 over the number 1,014,000
in Table VIII A and B is due to the inclusion of ‘Roundsmen
and Van Salesmen’, whose ‘annual earnings are about mn.
This sum is added to obtain the last column in VIII B, and is
used in Table IX,
INCOME IN THE YEAR 1931
In consequence of the reduction of the income-tax exemption
limit for earned income firom ;^i62 to ^{^125 in the year 1931-32,
a considerable additional number of incomes, estimated at
1,100,000, were assessed as taxable, though many were not
taxed owing to additional allowances. The greater part of this
number was presumably drawn from the ‘Intermediate Class’,
that is, recipients of earned incomes less than £162 arising firom
non-manual work. The number in this class was estimated at
1,990,000 in 1924 (when the exemption limit was ^{^150) with
an aggregate income of 190 mn.
SOME CONSTITUENTS OF THE NATIONAL INCOME 79
United Kingdom^ 1931^
! Occupied Persons
i Aggregate
i income
under ^^125
or manual
{£ mn.)
i
i
Total
(oojooo^s) 1
Under
;Cl 25 or
manual
(OOjOOO’s)
i £125 and
1 over non-
manual
1 (00,000’s)
Employers
1
1
Managers
Salaried
h 40
12
' 28 1
90
On own account
13
6 18
' ^ \
50 140
Shop-assistants
II
7
4
55
Wage-earners
128
128 i
0
U340
Total
192
153
39
1.535
Unemployed at Census
date
26
1
—
Total
218
—
This table shows i ,800,000 persons in the Intermediate Class
(if as in 1924* shop-assistants are counted with wage-earners)
with an aggregate income of ;^i4omn. The average income
(under £12^) at is to be compared with the ;;^95 (under
;^i5o) estimated in 1924.
The number of individuals assessed to tax in 1931-32 was
estimated by the Income-Tax Commissioners at about 4,900,000 ;
the exact number is not known, and is less than the number
separate assessments of income, since many persons are assessed
under more than one schedule or more than once under one
schedule. Among the individuals assessed is a considerable
number who are not occupied and derive their income solely
from property. A current estimate of this number is 250,000.
Thus there are presumed to be about 4,650,000 individuals with
incomes ^^125 or more, partly or wholly derived from gainful
occupation. This is 750,000 in excess of the number of occupied
persons (as shown in the table above), whose income from
occupation is 125 or over. The gap is serious, both as regards
number and aggregate income.
One possible way of filling the gap can thus be found:
{a) Among the wage-earners may be included some, es-
pecially in Industrial Orders XVII to XX, who are not
regarded as manual and assessed half-yearly (including here
some of the shop-assistants with less than ^^125 per annum).
I The Totals columns in the table and the table on p. 68 are equivalent.
8o SOME CONSTITUENTS OF THE NATIONAL INCOME
(b) Among the salaries some will have additional income
from property or supplementary work which bring their incomes
from under to over £12^,
{c) Among the salaried there are many married women,
whose incomes are merged with their husbands’ in assessment,
and then the couple counts only as an individual.
{d) There is at present no basis for deciding how many of
those working on their own account are assessed to tax.
On the assumptions that these classes account for 750,000
persons, and that their aggregate earned income is £60 mn.
(i.e. £80 per head, men or women), the gap is closed. Part of
this ;;^6o mn. is included in the wage-earners aggregate, part in
salaried. The Intermediate Class in the Income Total is replaced
by a ‘'residual class’ that includes those incomes which are not
assessed to tax or included under wages. The amount to be
included is £80 mn., viz. the ^^140 mn. in the tables less
£60 mn.
Income from property that brings individual incomes above
;^i25 is already included in the Income-Tax Total. Any earned
income from occasional or supplementary sources should be
added, but the amount is not known and can hardly be great
enough to affect the total perceptibly.
The estimate for the total of the constituents of national
income so far considered in 1931-32 is then:
Assessed to income tax (‘actual income*) £2,065 nm.
Shop-assistants imder £125 55 ± 5
Wage-earners i ,340 ± 40
Residual class 80 ± 20
Total of these constituents £3,540 ± 50
The income-tax assessment for Schedules A, B, C is that for
the year 1931-32, that for D and E for 1932-33, which is
assessed on the previous year’s earnings. Income from wages
is excluded from E.
The margins of uncertainty indicated are in part comple-
mentary, so that less than their sum is suggested for the total.
It is possible, however, that on further investigation the 5(^80 mn.
for the residual class may need to be modified.
TOTAL NATIONAL INCOME, 1924-38
There is still a number of relatively small constituents to
be brought into ac<;ount in any statement of Total Income. In
Table IX these are included, whether they are definitely
Preliminary Estimates of National Income
(£ mn.)
BNI
6
The items printed in italics are specially subject to revision. * Amended from original paper,
t Under £150 or per annum.
82 SOME CONSTITUENTS OF THE NATIONAL INCOME
ascertained or are the subject of rough estimates, subject to
considerable revision, if possible, after further investigation.
The separate lines of the table may be briefly explained ;
1 . The assessments for Schedules A, B, C for each Fiscal Year,
such as 1925-26, are taken as applicable to the corresponding
Calendar Year, 1925.
2. The assessments for Schedules* D and E are antedated one
year, so that the assessment for 1926-27 is taken as applicable
to 1925^
3. Owing to the change in the method of assessment of
profits from a three-year average to one year an addition is
necessary in 1924.
4 and 5 have already been explained (pp. 68 seq., 75 seq. above) .
6. It has been assumed that the 1924 estimate is still valid
till 1930, and then reduced at the time of the lowering of the
exemption limit. Since 1931 some variation is assumed in
parallelism with other entries.
7. Income from property accruing to persons whose total
income is under the exemption limit is in some cases assessed
under Gross Income and subtracted to arrive at Actual Income;
in other cases there is no record. The whole sum was estimated
from rough data at ^^77 mn. in 1924, and again at £45 mn. in
1931, with subsequent adjustments to 1938. In the absence of
information the estimate for 1924 has been repeated till 1930,
' and then reduced as in line 6.
8. Besides the income of Charities, etc., assessed under Gross
Income and subtracted to obtain Actual Income, it is known
that a sum (estimated at £12 mn., rising to £1^ mn.) is
unassessed. This estimate has been included,
9. It is assumed that interest at is. per annum is payable on
outstanding certificates less the number purchased in the same
year,
10. Pensions here include war pensions to men and de-
pendents and medical treatment, C 3 ld Age Pensions and the
Government grant to Contributory Pensions.
1 1 . Employers' contributions to the National Unemployment
and Health Funds, which are not included in Actual Income
under Schedules D and E, are here included, on the assumption
I The entries for 1938 have been modified in accordance with the figures
given in the WMte Paper : An Analysis of the Sources of War Finance and an
Estimate of National Income and Expenditure in 1938 and 1940 (Gmd,
6261). ' ^
SOME CONSTITUENTS OF THE NATIONAL INCOME 83
that they are additive to the income of wage-earners which has
been computed as including only those actually at work. It is
arguable that the Government’s contribution should be included.
Or we might take the total amount of benefits less the workers’
contributions, in which case we should substitute :
Benefits less Workers^ Contributions {£mn,)
(Health and Unemployment)
1924
39
1931
^925
41
1932
105
1926
49
1933
78
1927
44
1934
83
1928
49
1935
81
1929
53
1936
80
1930
97
In Table IX, however, the procedure followed in 1924 has
been adopted. If the new figures were used, there would have
to be an adjustment under ^transfers’.
12. This includes an allowance for evasion less over-
assessment in 1924, which has been dropped in subsequent
years; an adjustment for income from real property rising
mn. per annum between the years of re-assessment, when
it is put at zero; a rough estimate of income accruing to
Government from property or trading at home, and an addition
(or subtraction) for excess of overseas Government receipts over
payments.
13. This is largely conjectural.
14. Rough estimates are made of the interest payable to
foreigners on the National Debt and are subtracted from the
total interest paid.
The Total A corresponds to Aggregate Income in the 1924
study (Bowley and Stamp), while the Total B was termed
Social Income. The figures here differ from the earlier owing
to an adjustment in line 3 (using final instead of provisional
assessments), additions in lines 8 and 9, and a modification and
addition in line 12. Since probably there is some duplication
of shop-assistants salaries in 1924 in lines 2 and 4, in the final
line the total is reduced.
The official White Paper, referred to above (p. 82 n.) gives an
estimate of the Net National Income in 1938. The total is
^^4,415 mn. as compared with ;^4 j 362 mn. in the last line of
Table IX. By the courtesy of the Central Statistical Office I am
able to analyse the differences.
6-2
84 SOME CONSTITUENTS OF THE NATIONAL INCOME
The largest difference is in wages, and is due, as explained
above (pp. 73-4) , to a larger factor for number of weeks paid for
in the year in the later estimate.
In line i it is held that Schedule B is under-stated, for w^ch
allowance was made in Table IX in line 6, and that Schedule A
is under-assessed, for which line i2 possibly includes an item.
Line i
Lines 2, 3, 4
Line 5
Lines 6, 7, 8
Line 9
Line ii
Line 12
Government net income
Subtract business losses
Total
Subtract :
Income due to foreigners
National Debt interest
Excess
Defect
While
of
of
Table IX
Paper
Table
Table
515
527
12
2,091
75
1,691
1,766
210
210
' 20
1 1
9
37
0
37
18
1
0
50 h
12
0
— 20;
4.582
4.635
53
35
35
185
185
Total
4,362 454^5
53
Line 9 is probably estimated in the White Paper with more
knowledge of the facts; but the possibility of increasing the
^i I mn. to mn. is admitted.
For line 1 1 employers’ contributions are regarded as a tax,
not as anyone’s income, in the White Paper. The treatment of
this sum is to be decided by considering what definition of
Income is appropriate for the purpose in hand.
The treatment of Government Income is again a matter of
definition. .
Estimated business losses can be balanced against under-
3 ,SSCSSIIlCIlt*
Thus the difference in the totals (i-2 per cent) is partly due
to definition, partly to different judgments where the data are
incomplete.
2. CHANGES IN SALARIES IN GREAT BRITAIN,
1924 TO 1939^
By Joan G. Marley AND H. Campion
This paper gives a summary of the preliminary results of two
enquiries made by the Economics Research Section of the
I Reprinted with slight modifications from the Journal of the Rcyal Statistical
Sodetj), Part iv, 1940, fay kind permission of the Council.
SOME CONSTITUENTS OF THE NATIONAL INCOME 85
University of Manchester relating to changes in salaries in
Great Britain from 1924 to 1939. The first was a sample enquiry
of salaries paid in 1938 to 700^000 persons, and was undertaken
in collaboration with the National Institute of Economic and
Social Research. The second was the collection by the Economics
Research Section of details of changes in salary rates made by
private firms and public bodies between 1924 and 1939. The
analysis of the results of the two enquiries has been suspended
because of the war, but it is possible to give here details of
salaries paid to different classes of salaried persons in 1938 and
also index-numbers of changes in salary rates from 1924 to 1939.
A. NUMBER OF SALARIED PERSONS
For the purposes of both enquiries all persons employed in
non-manual occupations in private industry and in public
administration (excluding employers, persons ^on their own
account’, the armed forces, and persons paid wholly or mainly
by commission) were taken as salaried persons. This basis of
classification was chosen to conform with the classifications of
salaried persons used by the Board of Trade for the Census of
Production, by the Board of Inland Revenue for assessments
under Schedule E for income tax and by the Ministry of
Labour for purposes of unemployment insurance. Thus our
estimates of the number of salaried persons in Great Britain
include {a) the technical, administrative and clerical staff — to
use the description adopted in the Census of Production —
employed in manufacturing industries, and ( 5 ) other persons
not in manufacturing industries, who are assessed annually for
income-tax purposes under Schedule E (excluding weekly wage-
earners in manual occupations and shop-assistants) or are non-
manual workers as defined for purposes of unemployment
insurance.
No claim can, of course, be made to absolute accuracy in the
estimates of the numbers of salaried persons used in this paper.
The line of demarcation between manual and non-manual
occupations has never been clearly drawn and is less distinct
than it was. Other investigators might wish to exclude some
persons whom we have included or to make additions to our
totals. Their alternative estimates, if shop-assistants are excluded,
are not, however, likely to differ much from those given in this
paper. Shop-assistants have been excluded throughout from
our figures of salaried persons, even though their work may be
86 SOME CONSTITUENTS OF THE NATIONAL INCOME
considered non-manual. Details of earnings of shop-assistants
and changes in their rates of earnings since 1924 given
separately in Section D of this paper.
Salaried persons have been classified into nine categories
according to the branches of industry in which they were
engaged. (In each branch of industry there may be persons
engaged in similar occupations. More than half of the salaried
class in 1931 were in clerical occupations.) The method of
arriving at the estimates in Table I was first to separate persons
Table I
Estimated Number of Salaried Persons {excluding shop-assistants)
in Great Britain in 1931 and 1911
(thousands)
Branch of industry I,
in which employed
1931
1911
Total
Males
Females
Total
Males
Females
Total
2,900
L775
L125
L532
954
578
A. Private Industry
481
1
228
51
Manufacturing
726
245
279
industry and
agriculture
281
178 i
117
61
Distribution
488
207
Finance
324
252
72
7
Transport
159
130
29
38
2
Personal service
122
50
72
49
18
3^
Professions
394
213
181
442
224
218
B. Public Administration
87
36
Central Gk)vemment
210
1 X33
77
I 123
Local Government
administration and
industry
248
! 169
j
i
79
169
140
29
Teachers
1 229
I 66
163
197
i 54
143
employed in public administration from persons employed in
private industry. Persons employed by the State and local
authorities were then divided into salaried oflBcials and wage-
earnefs, and the salaried officials in turn sub-divided into the
three categories [a) non-manual civil servants employed by the
State, {b) administrative and clerical staff employed by local
authorities and (^) teachers employed by local authorities.
Salaried persons employed in private industry had to be
separated on the one hand from wage-earners and from
employers and workers on their own account* on the other. They
were then sub-divided into the six categories of {a) technical.
SOME CONSTITUENTS OF THE NATIONAL INCOME 87
administrative and clerical staff employed in manufacturing
industries and agriculture, (b) the salaried staff (excluding shop-
assistants) of firms engaged in wholesale and retail distribution,
[c) officials of banks, insurance and finance companies, (i) the
non-manual workers of railway, road and transport under-
takings, {e) the salaried staff (excluding domestic servants) of
individuals, clubs and businesses engaged in providing personal
services and (/) the professional, clerical and administrative
staff of all individuals and firms providing professional services.
In 1931 the number of salaried persons in Great Britain is
estimated to have been mn. and to have increased further
to 3*2 mn. in 1938 — one in seven of all occupied persons in the
country. The number of salaried persons has been increasing
since before the last war both in total and also relatively as a pro-
portion of the total occupied population. The number increased
from 1*5 to 2*9 mn. between 191 1 and 1931, and this represented
an increase from 8-3 per cent of the total occupied population
in 1 91 1 to 13*8 per cent in 1931. The increase in the number of
females employed in non-manual occupations has been greater
than for males. F emales in salaried occupations were 1 8*0 per cent
of the total number of occupied females in 1931 . The percentage
of occupied males in salaried occupations was only 12*0.
Although the total of all persons occupied in public adminis-
tration has increased by a greater rate than those occupied in
private industry since 1911, the number of salaried persons
employed in private industry has risen more than the number
of salaried officials of the State and local authorities. There has
been a marked expansion of non-manual workers in manu-
facturing industry, distribution, finance and transport. The
number of salaried persons employed by businesses providing
professional services has decreased mainly because many in-
dustrial concerns and public bodies now employ a larger
number of officials with professional qualifications than they
did before the last war. The slower rate of increase in salaried
persons in public administration is, however, partly explained
by the relatively slow growth in the number of teachers em-
ployed by local authorities. Civil servants, Local Government
officials and school-teachers form still t^e three largest homo-
geneous groups within the salaried class, but in 1931 they were
less than one-quarter of all salaried persons. 79 per cent of all
salaried males in 1931 and 72 per cent of all salaried females
were employed in private industry*
88 SOME CONSTITUENTS OF THE NATIONAL INCOME
B. EARNINGS OF SALARIED PERSONS IN 1938
The first enquiry undertaken by the Economic Research
Section was to collect details of the average earnings of persons
in each of the nine categories into which we had divided the
salaried class in 1938. It was possible to obtain information
directly covering the majority of civil servants and teachers, but
for the remaining seven categories it was necessary to ask a large
number of firms and institutions if they would give details of
salaries paid to their technical, administrative and clerical staff
in the Calendar Year 1938. They were asked to state:
{a) The numbers of males 21 and over, males under 21,
females 21 and over and females under 21, receiving salaries
classified according to the amounts of salaries they were paid in
the last financial year.
{b) The total salaries paid (without deductions for super-
annuation or for unemployment and health insurance contri-
butions) in the last financial year to males and females in each
salary group.
Table II
Percentage Distribution of Numbers of Salaried Persons {excluding teachers
and civil servants) in Great Britain in 1938 according to salaries received
(percentages)
Range of
annual
salaries
Weighted
1 Unweighted
Total
Males
Females
Total
Males
Females
Total
100*0
100*0
100*0
100*0
100*0
100*0
Dp to £40
2*2
4-7
1-5
1*0
3-0
;£40-59
4*6
2-9
9*5
3-5
2*4
6*4
X60-89
9’3
5*7
19*1
8*4
15*8
* 90-125
11*4
5*0
28*1
10*8
5*2
26*4
;£■ 1 36-1 62
10*0
6*6
18-3
9*6
6*4
1 8*8
£163-250
21*8
22*9
i6*2
22*3
21*8
23*6
Oyer ^£’250
40*8
55‘5
4*1
43*9
57*4
6*1
Excluding the information obtained for civil servants and
teachers, returns were received from firms and public bodies which
employed 308,000 salaried persons and paid ;^8o mn. in salaries
in 1938. Most of the returns received related to the 12 months
ending 31 December 1938. The returns covered approximately
1 1 per cent of the total number of salaried persons (excluding
civil servants and teachers) in Great Britain in that year.
.SOME CONSTITUENTS OF THE NATIONAL INCOME 89
^ Table III
Percentage Distribution of Numbers of Salaried Persons classified
by amount of salaries received in 1938
(percentages)
Sex and age
of salaried
persons
Range of
annual
salaries
Private industry
Public ad-
ministration
Manu-
facturing
industry
Distri-
bution
Finance
Trans-
port
Pro-
fessions
Local
authorities
Total
100*0
100*0
100*0
100*0
100*0
100*0
Males, 21
Up to £^o
—
—
—
—
—
0*3
and over
£40-59
0*1
0*1
—
0*1
—
0*3
£60-89
0*4
0*8
0*5
0*2
1*2
0*8
£90-125
3-2
6-5
2*4
1*3
3*J
£126-162
9*0
20*0
3*7
5*5
i8*4
8*9
^163-250
33*1
30-5
11*7
29*5
34*5
34*4
Over :^250
54-2
40*2
81*7
63-6
38*5
52*3
Total
100*0
100*0
100*0
100*0
100*0
100*0
Males,
Up to £^o
i6*i
19*4
2*8
15*4
22*2
5*8
under 21
£40-59
31-3
27*2
10*7
19*7
27*8
21*0
£60-89
377
37-1
53*3
24*5
33*3
45-6
£90-125
12*3
13-8
29*9
39*9
16*7
25*2
£126-162
1*3
2*5
3*4
—
—
2*5
2163-250
0*6
—
0*5
—
0*2
Over £2^0
0*7
—
—
—
—
1 —
Total
100*0
100*0
100*0
100*0
100*0
106*0
Females,
Up to £4.0
0*1
2*0
—
—
1*3
0*7
21 and
£40-59
0*6
1*8
—
0*3
—
1*0
over
£60-89
9*4
9*0
2*3
1*4
5*3
3*8
£90-125
43*5
32*6
1 8*6
20*3
21*7
21*4
£126-162
29*3
27*2
23*8
22*0
29*0
25*4
£i6^-2y>
14*5
20*0
45*0
54*2
32*2
35*8
Over £250
2*7
7*5
10*3
1*8
i
10*5
11*9
Total
100*0
100*0
100*0
100*0
100*0
, 100*0
Females,
Up to £40
15*8
^5*4
0*7
5-6
17*0
8*0
under 2 1
£40-59
31*9
26*0
4*5
Ifl
23*4
21*8
£60-89
43*0
39*3
42*3
30-6
27*7
48*2
£90-125
9*0
i8*9
51*5
52-8
23*4
21*3
2126-162
0*3
0*4
0*9
—
8*5
1 0*7
£163-250
0*2
—
—
I
Over £250
—
1
—
—
* The percentages are given in each case to the nearest figure in the decimal.
The unweighted percentages given in Table II were calcu-
lated from the totals of all the returns received. Since, however,
the number of persons covered by the returns was not the same
go SOME CONSTITUENTS OF THE NATIONAL INCOME
proportion for each class of salaried persons^ the percentages for
each category were combined by weighting the number of
persons in each category. The percentage distribution of salaries
as weighted in this way is not very different from the un-
weighted distribution. Table III does, however, show some
noticeable differences in the ranges of salaries paid in different
branches of industry.
The details of salaries paid to teachers and to civil servants
were not received in a form which allowed them to be incor-
porated in Tables II or III. 85 per cent of male school-teachers
employed by local authorities received salaries in 1938 of more
than £250 a year, 13 J per cent received between ^200 and
£ 2 ^ 0 , and 1 1 per cent less than £ 200 , Corresponding per-
centages for female teachers were 54! per cent more than :;^250,
30 per cent between £200 and ^{^250, 15I per cent less than
£ 200 . The inclusion of both these classes in Table II would have
raised substantially the number of males and females in the
higher salary groups. Although detailed figures are not available,,
it may be estimated that about 30 per cent of salaried male
civil servants received salaries of more than ^^250 a year in 1938,
60 per cent between £ 12 ^ and ^^250, and 10 per cent less than
^£'125. For females in non-manual occupations in Government
employment the corresponding figures were about 8 per cent
more than ^^250, 50 per cent between ;^i25 and ;^250 arid
' 42 per cent less than ;^i25-
a CHANGES IN RATES OF SALARIES, 1924-39
The second enquiry was undertaken to see how far rates of
salaries had changed between 1924 and 1939 and to provide the
informatiorr needed for compiling an index-number of changes
in salary rates. All the firms, institutions and local authorities
covered by the first enquiry were again approached and most
of them were kind enough to give information. In addition,
other firms who had not been asked to assist in the first enquiry
gave details of changes in their rates of salaries since 1924.
Altogether information was received covering 550,000 persons
or 17 per cent of the salaried class in 1938. Details of changes
in the salary rates of civil servants and of teachers were obtained
mainly from official sources/
I Reports of the Royal Commission on the Civil Service, 1929-31 (Cmd,
3989) and of the Committee on National Expenditure (Cmd. 3920).
SOME CONSTITUENTS OF THE NATIONAL INCOME 9!
Employers were asked to give details not of special increases
or decreases made in salaries of individuals, but only of general
changes in salary rates which affected all or sections of their
salaried staffs. Since, however, many small firms employ only
a few salaried persons and since even large firms may have no
organized scale of salaries, any index-number of changes in
salary rates is necessarily less trustworthy than an index-number
of changes in wage rates.
For the returns received, the changes in salary rates for each
firm were calculated from 1924 to 1939, expressed as percentages
of salary fates paid at December 1924. The percentage changes
in rates for different firms were then combined by weighting by
the salary bills of the firms in 1938. Separate index-numbers
were thus obtained of the changes in salaiy rates for each cate-
gory of salaried persons and they are shown in Appendix I;
the general index-numbers were reached by weighting the
percentages for each category by the estimated total salaries paid
to all persons in each category in 1938.
D. EARNINGS OF SHOP-ASSISTANTS
In 1931 the number of shop-assistants in Great Britain was
975,000, of whom slightly more than half were males; the
Table IV
Percentage Distribution of Numbers of Shop-assistants in Great
Britain according to earnings received in 1938
(percentages^
Range of
earnings
Total
Males !
1 Females
21 and
over
Under
21
21 and
over
Under
21
Total
1 00-0
1 00-0
100*0
100*0
100*0
Up to £4.0
1 0*4
0*1
31-4
0*3
21*9
^0-59
12*6
0*1 ;
31-7
0*9
36-0
£60-89
17*9
0*3 1
24*1
29*5
37*4
1 8*3
5*8 !
11*0
55'5
4*5
£126-162
' 12*2
?3'7 1
1*6
10*2
0*1
- £163-250
25‘4
62*1 i
0*1
—
Over £250
3*3
8*0 j
—
0*6
—
number is estimated to have increased to at least 1,050,000
in 1938. It was decided to collect figures of the earnings of this
important group of operatives and of changes in their rates of
earnings since 1924 at the same time as the two enquiries
92 SOME CONSTITUENTS OF THE NATIONAL INCOME
described above, since figures for shop-assistants were not
collected for the wage enquiries of the Ministry of Labour. The
returns received covered 125,000 shop-assistants who were paid
£141 mn. in 1938.
E. A GENERAL INDEX OF RATES OF WAGES AND
SALARIES
The information given in this paper gives the opportunity for '
the first time of compiling a general index-number of changes
in rates of wages and salaries for Great Britain since 1924.
Table V
Index-numbers of Changes in Rates of Wages and Salaries in
Great Britain
(percentages)
I
Total
Wage rates
(excluding
shop-
assistants)
Wage rates
of shop-
1 assistants
Salary
rates
1924
Dec.
1
i 1 00-0
100*0
100*0
100*0
1925
Dec.
100*4
100*6
100*0
100*0
1926
Dec,
100*7
101*2
100*0
99*7
1927
Dec.
100*3
100*5
100*0 i
99-8
1928
Dec.
99-5
99*4
100*0
99-6
Dec.
1 99*1
98*8
100*0
99*7
1930
Dec.
98-5
98-2
100*0 1
99*0
1931
June
97-4
97*1
100*0 1
98-2
Dec.
96-2
96*5
99-7
95-6
^932
June
95-4
95*4
99-7
95-4
Dec.
94-9
94*6
99-7
95-5
1933
June
94-5
94*0
99-7
95-6
Dec.
94-6
94*0
99-7
95-8
1934
June
94-7
94*0
99-7
96-0
Dec.
95-1
94*3
99-7
96-8
1935
Dec.
96-3
95*7 :
99-7
97-6
1936
Dec.
98-1
98*1
100-3
98-1
1937
Dec.
ior*7
103*1
102-8
98-7
1938
Dec.
102*9
104*7
102-8 1
98-9
1939
June
103*5
105*5
103-7
99-0
Professor Bowley has prepared index-numbers of wage rates from
2924, and it was possible to combine his figures with the index-
numbers of changes of salaries and of rates of wages of shop-
assistants given in this paper to obtain a general index. The
three constituent series of the general index were combined by
weighting according to the estimated totals of wages and of
salaries paid in 1938. The general index of rates of wages and
salaries given in Table V thus covers all occupied persons,
APPENDIX I
Index-numbers of Changes in Rates of Salaries in Great Britain^ i9^4""39
o
Cj
c;
H
9000999999000000C000
ooooobbbbbbbbbinbbbcc
oooooooooicno^CDaiaiooooco
V
9 9 9^ 9 9^ ^ T* CO m o ^ cq c ". o
6 6 cb c^cb cb f>* io ih ih »ot6 r^cb cb cb cb Oi
o o CDooG^o^ocr)<T><j>a)cr5a>o^cr>cr>cr5Cic>
O ^
o o
tH w.i-< C( COOOCOCOCOCOW CM CM (M CM CM
OOOOOOCOCOCOCMOOOOOO'-'CMCMOICMCM
o o o^c^cno^a^C)G)a5cr5c:oai<3^05cr)c3^CT><7vcr:
• S
S-2
99999999?^'!^1^T^T^T^'^'^‘^‘^^®
6 6 6 6 6 6 6 6 cdo cb cb cb cb cb cb 6 6 6 6 6
OOOOOOOOCDOCJ^O^CDCJ^CT^jOOOOC
^ <0
o s
" ^
o 1)
9P999999)ai9>990999oo9o
666 6 666cbcbt6666666666 6
ooooooooa^cj^oooooooooo
pH
0
1
999 99'7^'7‘IP^'7<'7*'7''7' ^ C) 9 « w
6 6 6 o o 6 6 <j^o^cTiGiC^o^c^c^b)Oib 6 6
O O O O O O O OCJ)C?^OC>OO^CD0500 o o
§
fl
s
O 9 95 Ip PP9 9 ppppp y<9> w Ci
6 6 6^ 6 6 6 ^^<6 ioihioCoioCnCoib^^iiniuo
o o cno o o cr^o^coG 50 C 7 )o^cooiC)cncr>cy;cri
•Sg
■§
000
6 6 6
000
o M 9 9 9 9 T* ^
6 6 6 6 6cbcbcbcb « a
O O O O O C 7 ^ 0 )Cf)<J) 0 >CDC 7 )C )00 C O
S-< CO
J.S
c 3
■M
o
H
O O CTi CDCO C 9 pO^pM o >;^ 99 P pt^O p p
6 6 6 ^ 6 ^ 6 > 05 a^cb ih io io ib ibcb cb Kcb 066
O O CT)C7^0Cr)C750^0)OCy5CnO)C3:iG)CTiO^C7iO o
o O t^co CD 9 - 9 9 CO pCD Cp OCpcD 9 9^P9
6 6 6 ) 6 ) 6 ^ 6 > 6 )cb b in b b bcb cb Kcb cb cb 65
o o cy)CDCT)C3C7>cricr)C?)cr><7)C?)C3>cy5C50c7ic?)<7i
. . . •(») ‘CD *CJ
ooooSodOrtOri
§A §/^
V V <U V (0 V V
9 s
lOCD r^co o «
CM CM W (M CM CM COCO
C75C)d<JiO^C75005
CM
CO
toco r^co os
CO
CO
coco CO CO CO
Oi
0
ch
CO CO 05 C3^ CO
M
M w 1-1
94 SOME CONSTITUENTS OF THE NATIONAL INCOME
excluding employers, persons working 'on their own account’,
commercial travellers or persons working mainly on commission
and members of the armed forces.
F. CONCLUSIONS
The preliminary results obtained from the two enquiries
described in this paper may be conveniently summarized :
(a) The salaried class has been growing during the last
30 years. In 1938 one out of every seven occupied persons in
Great Britain was engaged in non-manual occupations.
(b) About 55-I per cent of males and 4 per cent of females
in salaried occupations (excluding teachers and civil servants)
received salaries more than £250 a year. 15 per cent of the
males and 61 1 per cent of the females in salaried occupations
received less than £125 a, year. Total salaries paid amounted
to between one-sixth and one-fifth of the total personal incomes
in Great Britain in 1938.
(c) Rates of salaries did not fall so much as rates of wages
in the depression of 1929-33. Since salaries of important groups
of non-manual workers changed between 1924 and 1939 ac-
cording to the movements of the Ministry of Labour Cost of
Living index-number, there was a greater decline in the salary
rates between 1924 and 1928 and a slower recovery in salaiy
rates than in wage rates between 1934 and 1939. '
NOTE BY A. L. BOWLEY
Since Mr Campion’s Paper and my Address are part of the
same larger investigation and to some extent cover the same
ground, it will be convenient to readers to have their relation to
each other explained. While Mr Campion is solely concerned
with salaries, I was concerned on' the one hand with the whole
of 'Intermediate’ or 'Residual’ Income, but on the other only
with that part of the salary aggregate which was below the
exemption limit.
Consequently the statistics in my Table VII do not correspond
very closely with any given by Mr Campion and Miss Marley.
The range of mine is somewhat greater, because some estimates
were included for industrial groups for which there were no
returns in the questionnaires, and in some cases (other than
agriculture) there were small additions to the aggregate income
under ^^125 for small employers. But the main difference is that
Mr Bpoker (whose detailed work I incorporated) took, as the
SOME CONSTITUENTS OF THE NATIONAL INCOME 95
totals to which the computed percentages were applied, the
entries in the Population Census that included employers, while
Mr Campion’s totals excluded them. Thus the total number of
salaried males in April 1931 is given by him as 1,775,000 for
Great Britain (p. 86), while in Table VII (which includes
Northern Ireland) the total of employers, managers and non-
manual operatives for the same industrial groups is 2,430,000,
of whom 1,578,000 are operatives and 852,000 employers or
managers. For females, on the other hand, Mr Campion’s total
is 1,125,000 for Great Britain, while in Table VII the corre-
sponding total is 1,046,000 for the United Kingdom, including
136,000 employers and managers. These discrepancies are due
to some differences of definition and to some doubt about the
interpretation of the questionnaire on the part of those who
filled it up.
In the industrial groups included in both estimates, Mr Cam-
pion’s total for salaries below 25 p.a. would be about mn.,
while mine for all occupied non-manually (except persons
working on their own account) is mn., of which £2 mn. is
attributable to Northern Ireland. So that the final discrepancy
in the aggregate of these incomes is relatively small.
,3. INCOME FROM AGRICULTURE
Estimates of Income from Agriculture come from two sources.
First we have Income Tax Reports, which should include the
income of landowners, farmers and others gaining their living
from the land, and estimates of wages from general and special
wage statistics. Secondly, the Ministry of Agriculture gives
annuaFstatistics of the Gross Value of Agricultural Produce. In
connection with the 1924 Census of Production an estimate was
also made of Net Value, but in other years special and hazardous
computations must be made to estimate the cost of feeding stuffs,
fertihzers, etc. bought from manufacturers or imported.
The latter method gives the higher estimate, and since there
are reasons for holding that farmers’ income is understated in
the Income Tax Reports, it is to be preferred, with allowance
of a considerable margin for doubtful items.
I. ESTIMATES FROM INCOME STATISTICS
From the income side, we have the figures published in the
Inland Revenue Reports, under Schedule A and B, but these
96 ‘ SOME CONSTITUENTS OF THE NATIONAL INCOME
do not give us exactly what we want. Incomes derived from
the ownership of land are assessed under Schedule A. Farmers’
incomes can be assessed under either Schedule B or D, but,
since very few farmers keep accounts, most of them are assessed
under Schedule B, where the tax is based not on actual income
but on the annual value of the land. These figures are necessarily
approximate, and the total of farmers’ incomes, shown under
Schedule B, is almost certainly an under-estimate. For although
it includes the incomes of some people (e.g. innkeepers)
occupying land but not primarily engaged in agriculture,^ it
excludes agricultural incomes assessed under Schedule D, and
incomes of managers assessed under Schedule E (neither of
these being separately shown), as well as any subsidiary incomes
which agricultural households may obtain, e.g.' from retail
distribution or from paying guests, though the last is probably a
small item. The fact that most farmers prefer to be assessed under
Schedule B also suggests that the figure is an under-estimate.
From the figures of Gross Income^ under Schedules A and B,
we have to subtract Repairs and Other Reductions and Dis-
charges, in order to arrive at Net Income,
Employment figures are based on the Population Censuses
(Industry tables) showing the number of operatives employed
in agriculture in 1931 (Great Britain) and 1926 and 1937
(Northern Ireland) ; for other years they are interpolated.
For the course of wages we have monthly statistics of the
minimum rates of ordinary labourers ordained for each county.
Average earnings are greater than the average of these minimum
rates owing to additional payments for special work, overtime,
piece-work and other factors, and fairly accurate estimates are
available for these from time to time. The aggregates of annual
earnings are probably not subject to an error greater than mn.
The totals so obtained for 1931 are:
Schedule A mn.
B 40
Wages 64
Total £i^q
I That the number of such people may be considerable is illustrated by the
fact that, in 1931, the number of agricultural holdings in Great Britain of
more than one acre is stated (in Agricultural Statistic^ as 468,000, a figure
considerably in excess of the 365,000 recorded in the Census of that year as
employers, managers and workers on their own account engaged in agri-
culture. But the total incomes derived from the occupation of land of these
people is not likely to be, very large.
SOME CONSTITUENTS OF THE NATIONAL INCOME 97
To this we must add a small sum for farmers assessed under
Schedule D, about mn. for non-manual salaries^ and mn.
or more for the net income of firms which undertake tractor,
ploughing and reaping; the numbers thus employed are in-
cluded under Agriculture in the Census of Population, but the
value of their services is not included in the Census of Pro-
duction. We thus arrive at £1^^ to :£'i50 mn. for the income
arising from Agriculture in 1 93 1 , and similarly ;^i 40 to 1 50 mn.
in 1938.
II. ESTIMATES FROM PRODUCTION STATISTICS
For 1938 Mr M. G, Kendall [Journal of the Royal Statistical
Society^ ^94^) estimates the Income and Expenditure of Great
Britain and Ireland treated as one ‘National Farm’, ‘inter-farm
transactions such as the transfer of livestock or sales of crops
grown for animal feeding on farms being ignored’.
Estimated Income and Expenditure Account of the National Farm
{United Kingdom)
(Average 1937-39)
Income
Expenditure
£mn.
Sales of products
—
Labour
^5
Livestock and livestock
200
Rent and mortgage pay-
33
products
Farm crops
84
ments
Feeding stuffs ^
65
Miscellaneous (seeds for
I
Fertilizers and seeds
9
export, etc.)
Taxes, rates, etc.
Interest on loans, etc.
Miscellaneous expenses
(machinery, etc.)
Balance
4
285
7
20
82
285 ■
For the purpose of computing Net Output as in the Census
of Production we must ignore the expenditure on feeding stujSs,
fertilis^ers and seeds. The miscellaneous expenses are as regards
about £10 mn. for repairs, replacements, etc. and may reason-
ably be subtracted on the same ground that allowances are
made in the Income Tax Returns and in most treatments of the
Census of Production statistics. The remaining ;;^io mn. may
be regarded as out payments tractor and other companies,
of which 3^5 mn. may be taken as thedr net income.
BNI
7
98 SOME CONSTITUENTS OF THE NATIONAL INCOME
The balance in the table is the farmers’ income. We therefore
have as a very rough approximation;
Rents, interests ;^40 mn.
Taxes, rates 4
Farmers’ income 82
Subsidiary income 5
Labour 65
Total £196 mn.
Part of taxes, rates, etc. are necessary payments for drainage,
etc,, but on the whole this small item is somebody’s income,
though not evidently agricultural.
The production estimate thus exceeds the income estimate by
about ;^50 mn.
In The National Income^ 1924 (Bowley and Stamp), p. 25, the
relation of Schedule B to farmers’ income was analysed, by
considering the numbers of holdings of different sizes in relation
to apparent income. As a working hypothesis it was taken ^that
farmers with holdings of 100 acres or more were assessed as
having incomes over £150’. By comparison of the number of
farmers in the Population Census and the number of holdings,
it was deduced that holdings of under 10 acres were equal to
land occupied by non-farmers. Then there were left 260,000
holdings of from 10 to 100 acres not accounted for. 'The
average holding in this group is about 36 acres and a house, and
if we assume that the income from this group is ;^ioo (per
holding), the whole contribution to Intermediate Income is
;^26 millions.’
There is no need to make any additional entry in the table
on p. 8i. For these smaU farmers are included in the 'Residual
Class which contains all earners not accounted for in lines i to 5.
Table A shows the sequence of figures for the estimate from
Incomes. Table B gives details of the estimates of those classes
of expenditure which are deductive on the Census of Production
method. Also the estimated value of Gross Output is entered
year by year and hence the Net Output.^ This Net Output is
divisible among landlords, farmers, agricultural wage-earners
and others, and for repairs, etc. as discussed above. Mr Kendall,
however, estimates £74 mn. for feeding stuffs, etc. in 1938,
whereas in the table the estimate is ;^82 mn. The difference is
mainly due to an allowance for transport and selling costs.
I For 1924 and 1930 the Net Output is very nearly the same as those given
some time ago in connection with the Census of Production, small holdings
and forestry excluded.
SOME CONSTITUENTS OF THE NATIONAL INCOME 99
These estimates are not easily reconcilable with each other,
and there remains a considerable margin in the total which
should be attributed to income as tabulated in Table IX (p. 8i)
from the agricultural community as a whole. The following
table, which contains rough and uncertain estimates, shows the
nature of the problem rather than giving definite results :
Constituents of Agricultural Income •
(;^ooo,ooo’s)
Rents, tithes and mortgage interest
1924
38
1930
38
1938
31
Farmers’ income:
Schedule B
41
41 ‘
42
Addition
26
26
26
Schedules D and E :
Interest on loans
7
7
7
Salaries
2
2
2
Tractor, etc. companies
5
5
5
Wages
67
67
62
Total income
186
184
175
Feeding stuffs, fertilizers, etc.
85
58
82
Balance
24
i8
28
Gross output
295
260
285
The line termed Balance is obtained by subtraction. Its main
element is the upkeep of buildings, tools and machinery, fences,
etc. The figure for 1938 is higher than Mr KendalFs estimate
and there is no evident reason, except a general lowness of
prices, why it should be so much lower in 1930.
NOTES ON TABLE B
Home-produced feeding stuffs are estimated for 1924 and 1930
from Census of Production. For other years we assume that
the proportion of their cost to total gross output can be linearly
interpolated and that the same proportion holds from 1930
onwards. Imported feeding stuffs include the following items
from Trade Returns: maize, maize products, oats, oat products
(other sorts), cereal by-products, oil-seed cake and meal.
Expenditure on fertilizers is roughly estimated from value of
imports and home production (available for Census years), the
figures being increased by 1 5 per cent for distribution costs and
reduced by value of exports.
Gross Output figures:
I. England and Wales. 1924/25 and 1930 j$i from Agricul-
tural Censuses (Cmd, 4605, p. 39) ; 1931/32 to 1937/38, estimate
7-2
United Kingdom
SOME CONSTITUENTS OF THE NATIONAL INCOME lOI
by Ministry of Agriculture published in. Agricultural Statistics, 1938,
Part i; 1925/26 to 1929/30 = Ministiy of Agriculture estimates
+ 3-3 per cent for each year since original estimates for Census
years were deficient by this amount, on average, compared with
final estimates; 1923/24 by linear interpolation of Census
figures for 1908 and 1925.
2. Scotland. 1924/25, 1930/31, 1935/36 from Censuses.
Other years after 1930/31, estimates of Department of Agriculture
for Scotland. For years between 1924/25 and 1930/31 by linear
interpolation of the proportion of output of Scotland to rest of
Great Britain. 1923/24, same proportion assumed as in 1924/25.
3. Northern Ireland. 1925/26 firom Census. Other years
from official figures, increased by 3 per cent for fruit and
vegetables (1926/27 to 1928/29, 1930/31, 1932/33, 1935/36);
estimated for remaining years by interpolating the proportions
of Northern Ireland output to that*of England and Wales.
An Index of Agricultural Production (quantity) is given on
p. 194 below.
4. NUMBERS OF EARNERS
The only complete statistics of the numbers of earners and other
occupied persons are to be found in the Census of Population
(Great Britain 1931, Northern Ireland 1926). The Unemploy-
ment Insurance Scheme covered about 75 per cent of the earners
before its extension to Agriculture and some smaller groups.
The Censuses of Production include only about half of the
employed population. National Health Insurance accounts for
over 80 per cent of the occupied population. When the differences
of definition and scope are analysed, it is found that these four
sets of statistics are broadly consistent with each other.
The Census of Population of 1931 shows in considerable
detail the numbers, ages and sex of persons occupied in the
aggregate and in each of a great number of industries. A dis-
tinction is drawn between employers, managers, persons working
on their own account, and the main body of salaried and wage-
earners. Also the number who stated that they were out of
work is recorded.
The Unemployment Insurance Scheme in 1931 excluded
non-manual employees earning more than £250 per annum,
all persons under 16 or over 65 years, and agriculture and
domestic service. Also employees in the service of Railways,
102 SOME CONSTITUENTS OF THE NATIONAL INCOME
Public Utility Works and Government (Central or Local) were
excluded when they were provided for under other schemes.
In Table A the statistics of the Population Census and the
Insurance Scheme are compared. For each industry the Census
figures are adjusted as in the .following example:
Males^ Cotton Industry
(ooo’s)
Enumerated in Great Britain 217
Northern Ireland o
217
Subtract :
Employers, managers and persons
working on own account 6
Those under 16 and over 65 15
— 21
Hence insurable 196
Such figures are shown in the A columns of the table.
In the B columns are given the numbers insured in April
1 93 1 5 estimated by interpolation from those recorded in July
1930 and July 1931.
For the comparison of A and B the Census figures are grouped
as closely as possible in the same industrial groups as those listed
monthly in the Ministry of Labour Gazette. There is always
difficulty in sub-classification of the great metals group, which
includes all branches of engineering, motors, ships, metal pro-
duction and a great variety of trades working mainly in metals.
In the Industries down to the first sub-total the agreement
between columns A and B is fairly close. A should run higher
than B because it includes persons with salaries over 3^^250. It
also probably includes under Food and Wood (furniture) a
number who are both makers and dealers, and are classified
under Commerce for insurance purposes.
In the latter entries, insured transport workers exclude a great
number insured under the special railway schemes. In Govern-
ment Employment, Commerce, Professions and Entertainments
a considerable proportion of the men and some of the women
have salaries over ^250.
In the second part of Table A the numbers stated at the
Census to be out of work (D) are compared with insured
persons wholly unemployed (E) and those ' temporarily stopped ^
(F), that is, persons who expect to return to their occupation
in a short time when there is work, and meanwhile do not
SOME CONSTITUENTS OF THE NATIONAL INCOME 103
seek other employment; coal-mining and the textile industries
account for a large proportion of this group. It is generally the
case among the males that the numbers under D are greater
than those under E, but do not exceed them by as much as
those under F. Thus it appears that men who were temporarily
stopped did not in many cases regard themselves as out of work
on Census day. The reason for the excess of E over D among
females is not evident; probably many married women who had
not worked at their occupation for some time registered at the
Labour Exchanges in the hope of benefit but recorded them-
selves as engaged in household duties at the Census. Other
differences are explicable on the same grounds as in the first
part of the table. It should be added that sick persons are not
counted as unemployed for insurance purposes, and that
columns D should be discounted, possibly up to 4 per cent of
columns A, to allow for illness or accident as a cause of being
out of work, before comparison is made with columns E and F.^
In Tables B the statistics of employment shown in the Censuses
of Production are compared with the relevant insurance returns.
The classification of industries is expanded a little in succeeding
years. In B i, Earth products includes mining products, cement,
bricks, earthenware and glass; Metals, vehicles include all
metal production, engineering and metal industries; Food, etc.
includes drink and tobacco. In each table Wood includes
furniture, and Gas, etc. includes electricity and water. In B 2,
Engineering includes electrical cables. Building includes public
works contracting, etc. In general the classification follows the
lines of the Insurance statistics in the Ministry of Labour Gazette.
In the Censuses of Production, Manual or Operatives exclude
employees (clerks, etc.) in the administrative offices; but these
are included tmder The first two columns relate to firms
employing more than ten persons; to the second are added
estimates for employees in small firms on the assumption that
the division by sex is the same in them as in larger firms in each
industrial group.
For the Insurance figures the average number unemployed
in the year (taking March, June, September and December in
1924 and every month in 1930 and 1935) is subtracted from the
number insured in July. In 1930 and 1935 the subtraction is
done in two steps, first taking off those wholly unemployed and
I It is, of course, only a coincidence that for males the grand totals of
B and F together very nearly equals that of A.
United Kingdom, Census of Population 1931, and Unemployment huurance Statistics
(ooo’s)
O O O O) •-*
o o o m
O'>C0
^ CO ^
<LO »->cjD Tht^m'^co o CO o
cxi CM in ci CM *-•
o c corh
OCO O) CO w
O CM or
o
CO
CO
m CM »-» CO
(*4 0) ^
^ ^CO cnn. CO
iilj CO CM CM
O -
5 •-< CM *-« CM CM
CO
CO
in
o
m
CO
00 i-i o or o or '
or I-* CO ►*<
O CO ►x ^oo w
or CM »nco *-< ino^*^ or loinmor
'^•-•CO CMOM CO
CM
o CO mco ^ «n
m*- CO coco*'
OMCO CTiorco o
*- CM a>cM
CO Of CO Oioo CO o o o ’^co coto or om o «
PQ inm^co rcico'ThCMoror^cMCO coro CD m
^ CO ^ CO
. <0 CO coco CM un r-- Of coco r^co cocf*-''«^hOoMcof>
:; mmoco coinco*^ofcor'*orco coco cnr^ *-•
_ MCO'-'COri^HH
^ CD mco coco 0)0 orco o of'^^coco *-< 00 Ojcd m
pq o m moo O'^om coo*-' '^hooco oco co o oco
Q M )-• «CD CM CMCO '-‘Cf^^cr
. ocD cf ocD CO I- CO M a)C 50 mmcr>T^>~* coocoo
^ CO o m mco cm *-* c^cmcdocc '^erco oi*-' cr i>o cmco cm
^ o*-* *-..-icococfr^*-' Of cfOf Of cm*-*G)Cm
o
O)
CO
193
o o o
CO O) O 01 01 CO
CO
«« 0= I S
HOP^
III1
tfi ^1
^ ^ iM w
pi Q pa csi
I 08 SOME CONSTITUENTS OF THE NATIONAL INCOME
Table B 3
Employees: Census of Production and Insured, 1935
(ooo’s)
Males and Females
Operative All + Small
firms
Insured less
unemployed
Wholly All
Coai-mming*
745
762
764
761
698
Other mining*
73
78
86
88
83
Mining products
48
55
55
47
p
Bricks
86
91
94
91
89
Pottery
63
68
69
66
58
Glass
41
46
. 48
42
40
Chemicals
H 3
194
206
197
X95
Metals, products,
vehicles
I >5 16
1,766
1,916
1.899
1,832
Textiles
989
L055
1,069
1,065
979
Leather
45
51
5S
65
63
Clothing
483
536
644
561
536
Food
299
377
477
360
354
Drink
79
lOI
113
99
9B
Tobacco
36
43
43
39
39
Wood*
149
167
236
205
201
Paper, printing*
329
401
434
196
392
388
Miscellaneous
155
183
136
966
Building*
399
434
703
974
Gas, etc.*
198
252
259
181
180
Total
5.876
6,660
7.470
7.278
6,986
Transport
204
217
217
• —
—
Local Authorities
199
212
216
—
—
Government De-
. partments
9 ^
102
102
—
Grand Total
; 6,370
7.191
8,005
—
—
* Statistics mainly from Preliminary Reports.
then also those temporarily stopped; some of the latter may be
counted as employed in the Census of Production account.
For the comparison the Census of Production should be dis-
counted, especially for men, for those whose salaries are over*
£ 2 ^ 0 , and alsA the numbers in small firms should be reduced
to exclude working managers. On the other side the insured
should be discounted by about 4 per cent for sickness, raised in
each year by about 4 per cent for boys and girls under 16 years,
and raised also .by 4 per dent in 1930 and 1935 for employees over
€5 years who were not insurable after 1927. With these possible
adjustments the numbers in most cases have the expected
relations to each other, hut there is some difficulty in engineering,
SOME CONSTITUENTS OF THE NATIONAL INCOME IO9
building and gas, etc. The Census of Production gives figures
(see p. 125) for the production by Central and Local Authorities,
and by Railway Companies. The last named includes locomotive
and other engineering and construction work, which for in-
surance purposes may be under engineering, vehicles, con-
tracting or transport.^ The Central Government also includes
shipbuilding and other industries. Since Local Governments
undertake directly or indirectly a lot of work that might be
insured under building and contracting, the number insured in
this category exceeds that in private firms. We cannot separate
in the Insurance figures Government employees who are doing
administrative work from those engaged in production, though
probably the latter form only a small proportion. It is also
possible that persons engaged in gas, electricity or water works
are included under Local Government for insurance purposes.
Outworkers, whose status in insurance is doubtful, are ex-
cluded firom these tables. They numbered 42,000 in 1924, 31,000
in 1930, and 26,000 in 1935. The bulk of them were in textile
and clothing industries.
‘ A summary comparison between the Censuses of Production
and the Insurance statistics may be given as follows:
Census of Production
(ooo^s)
1924
Large and small
firms operative,
administrative
and outworkers
8,055
Operatives
in large
firms only
65670
Insured (over 16)
at work in July
in Census of Pro-
duction industries
7,360
1929
—
6,420
7,520
1930
7.950
X93I
—
—
6,480
2934
—
—
7,040
2935
8,030
6,370
7,170
In the last column the figures have been raised in the later
years to allow for persons over 65 years, and it is assumed that
the number absent through illness is balanced by uninsured
boys and girls. - They exclude Fishing, Transport, Distribu-
I In March 1930 the Railway Companies employed 657,000 persons; of
the men 96,000 were office staff or supervisory, 62,000 on permanent way,
132.000 shop and artisan, 310,000 in trajSic or other departments, and
33.000 in ancillary businesses'. There were also 24,000 women. In 1935 the
total number of employees was 581,000.
no SOME CONSTITUENTS OF THE NATIONAL INCOME
tion. Commerce, Government, Professional and Personal and
Miscellaneous Services^.
The Censuses of Production do not relate exactly to the
Calendar years (Chapter in), and in view of the changes in. un-
employment in 1929-31, 1934-35 additional figures are given
for those years.
It will be seen that the figures in the last column are in each
year very near the average of the two previous columns, so that
we may conclude that the relationship between the Census and
the Insurance accounts has, in the aggregate, changed very little
in the eleven years.
The National Health Insurance Scheme includes all persons
who come under the Unemployment Insurance Scheme, to-
gether with domestic service and agriculture. Besides this main
body there is a number who, though their income is over ^^250,
join the scheme voluntarily, and some other small groups.
From the gross total of women we have to exclude women who
have retired from occupation on marriage, but are still insured,
when we are making comparative estimates of the number of
persons occupied. There are thus several definitions and corre-
sponding totals which we can use, and it would need a close
study of the Insurance Acts and their administration before we
could be confident that our definition covered the same classes
over a period of years, and to make explicit the differences
between the insured population and the whole occupied
population.
In Table G are set out for males and females separately the
changes from 1924 to 1938 (i) in the estimated number occupied
based on the Population Census of 1931 and carried backward
and forward on the assumption that the proportion of occupied
to all in each age-group had not varied significantly from year
to year (see p. 56) ; (ii) in the numbers entitled to benefit under
the National Health Insinrance Acts, excluding unoccupied
married women, and showing separately the numbers under
65 years; (iii) in the numbers insured against unemployment
and the numbers not recorded as unemployed.
The statistics relating to males are fairly consistent in the
three records. The first two columns are closely parallel till 1935
or 1936, allowance being made for slight differences in date (the
I The totals here differ from those in Table B, since here only July im*
employment records are used and allowance is made for persons over 65
years*
United Kingdom. Index-Numhers of Occupations
Females
Employment
insurance
16-65
Employed
)
He*
0 COO ojowcotr) oscoicio osto h.
j Insured
Ht<N
0 CO loco Ci m fcO to >ooo co m
222222n!iI«M'^‘^^‘^*^
!
Health
insurance
lO
1
0 ■^CO COO»-' 0 t'-^OO'-<
2222*^111111'"'’^'^'^’^'^'^*^
All ages
HnHn HC'i
0 01 10 CO io<£> ^ to io(X> CO
Population
Census
all ages
r^N Hoi »-4 NiH«HiN
00«'-<'-'Crojcrc(C('-*0(COCOTj^
00000000222222®
Males
Employment
insurance
16-65
Employed
hJn h(c< h|« HN
0 cnco to coco « -^00 co 0 0
Oa^CJOGGOO^O^O^OO^CIi-i
l-l
Insured
i-ijei H<Ni H« »-4n
0 <-• CO CO CO ^ Of co-si^tnt^o oi
0000000*-'^^J^*Hv-(N2
Health
insurance
0
(HjiM i-ifeji>H|DJ»-i|N Hc«
0 »-• Thco toco CO ajooowr^oci
00000000j;;^^j;|^|-jwwa
All ages
H|«r^r-4SiHe»r-t» h|CM
0 to lO i^co coco CO 0 '^^<0 CD
222222222222liIIi!ir^
Population
Census
all ages
0 0( CO toco t^O>0>CD*-H CM CO^
00000000000'-«‘^‘-***^
Year
'^toco i^co 05 0 cf CO into t^co
Cf « d d d d cococococococococo
05CD05CDCr>CDCD05CJ505050)05CDCD
112
SOME CONSTITUENTS OF THE NATIONAL INCOME
Insurance figures are for December, the Census for mid-year)
The third and fourth columns, that relate to the numbers of
males affed i6 to 65 insured for health and unemployment
respectively, show nearly similar movements throughout, except
that the latter increase more rapidly m the years 1930 35. But
after 1935 there is so rapid an increase m the number insured
in both schemes, that it cannot be explained
change in scope or admimstration. It imphes a drift from
uninsured to insured groups, of the order of 100,000 per annum.
Possible sources are a reduction in salaries which brought more
men under the £ 2^0 fimit, and a transfer from persons worfang
on their own account to the position of empl^ees. There is,
however, a difficulty, when one compares the Census wth the
Insurance figures, that the former include earners under 1 6 years,
whose numbers have varied greatly in reflection of the va^ng
number of births from 1908 to 1924. and it would be a tedious
process to make the series strictly comparable, and the correction
for the number of juniors would be quite small.
As regards the females the differences between the statistics
of the two insurance schemes are of a minor character and can
be no doubt sufficiently explained by close analysis of their
contents. The Unemployment Insurance are the more sate-
factory and it will be sufficient to examme their relation to the
Census figures. In more detail we have.
Females, Numbers employed as indicated by the Population Census
(ooo’s) (percentage)
Ages
1924
1931
1938
14 “
1,880
1,840
1=790
21 “
3.920
4,020
4^090
RK-
340
410
460
65 “
130
160
190
Total
6,270
6,430
6=530
21-55
4,260
4=430
4=.550
1924
100
100
100
100
1931
98
102
120
125
1938
95
104
135
145
lOO
100
102 ^
104
104
107
Females. Insured for Unemployment
EHstribution and transport
Cominerce
Govermnent
Professions, etc.
Hotels, laundries _
Together
Industry _
Total .
1924
561
37
50
281
998
2,033
(ooo’s)
(percentage)
1931
1938
1924
1938
773
855
100
140
150
75
93
100
200
250
44
112
100
90
225
89
168
100
130
250
366
446
100
130
160
1=347
1=674
100
135
168
2,236
2,313
100
no
I 14
3,031 3>583 3=987 100 1 18 132
SOME CONSTITUENTS OF THE NATIONAL INCOME II3
The Insurance figures need adjustment to eliminate persons
over 65 in 1924 and certain new classes of personal service newly
insured in 1938; when this is done the percentages of the total
become 117 in 1931 and 125 in 1938.
The main cause of the discrepancy is thus to be found in
services, as contrasted with industry, especially in distribution
(shops, etc.) and hotel and restaurant service. In the fourteen
years the insured population gained on the Census estimate by
nearly 700,000 persons. But in 1924 less than one-half of the
occupied women were insured, and it is not impossible that
50,000 per annum who would have been working on their own
account (e.g. as dressmakers), or only partly employed, or in
domestic service or other uninsured occupations, may have
turned (or rather their successors may have turned) to insured
occupations. Also women who have in fact given up paid
occupation may continue to register as unemployed insured.
But we cannot ignore the possibility that larger proportions
of women at various ages were occupied in 1938 than in 1924,
and in computing the wage bill we should keep as a margin the
earnings of an addition of about 60,000 persons per annum, or
over the 14 years an addition of about £^o mn.
XOTE ON THE DISTRIBUTION OF INCOMES
AMONG PERSONS
The purpose of this note is to examine the statistics that relate
to distribution, and the conclusion is unfortunately that no
trustworthy results can be obtained. The problem contains three
parts :
A. Income assessed for income-tax purposes.
B. Income, other than wages, below the income-tax ex-
emption limit.
C. Wages.
The only complete oflScial estimate relates to 1918-19 and is
given in the Report of the Inland' Revenue Commissioners for
1919-20. Since many of the incomes included were the averages
of three or more earlier years during which time there were
very rapid changes, its utihty was never great, and in any case is
completely out of date.
A. In recent years the only statements relating to distribution
of income are of the numbers and incomes of those assessed to
surtax. When, as was the case till 1920^ the tax payable was
8
BNI
II4 SOME CONSTITUENTS OF THE NATIONAL INCOME
regulated by a system of abatements for incomes under £^oo,
the data were sufficient for estimating the numbers of incomes
all up the scale by the use of Pareto’s Law, though there were
some abnormalities which were not readily explicable. Now
(apart from the surtax figures) we have only estimates of the
total number of payers of tax and total "actual income’, with
separation of those assessed half-yearly (wage-earners) from
others. In these numbers the income of a .wife is merged with
that of her husband.
B. The number and amount of small salaries are discussed
above (pp. 88, 89) . While there is some information about the
distribution of these amounts, there is none about the distribution
of other small incomes or profits. Also, since the salaried may
have other sources of income, and husband’s and wife’s salaries
are merged, the numbers under this heading overlap into A.
G. There has been no general account of the distribution of
wages or earnings by their amounts since the Wage Census of
1906. Local estimates, such as that of London in London Life and
Labour y 1934, VoL vi, pp. 78 seq., cannot be generalized; they can
only be used as indicating the probable algebraic or graphical
shape of the distribution' about the average.
There is a mass of data about rates of pay for different
occupations, and also of average earnings in industries which
include a multitude of occupations, but there are no means of
relating them to each other. Attempts to build up a table by
applying wage rates to the numbers in occupations, as given in
the Census of Population, break down because the Census does
not give sufficient detail for this purpose. For example, apart
from division by age, sex and district, all "hewers and getters’
in coal-mines are merged together, all "dippers and glazers’ in
pottery, aU cotton weavers, and so on. These include a variety
of occupations; where there is payment by piece there is great
variety in earnings and even on time rates uniformity is far from
complete. We can therefore draw only very broad conclusions
by this method, and in particular we cannot tell what proportion
of workers pass the income-tax exemption limit^ and thus
overlap with A.
An additional path of research is found in Insurance figures,
since besides all manual workers, all salaried persons (over 16
I The numbers available of persons receiving more than the exemption limit
of 1 25 exclude a considerable proportion of the very numerous married men
for whom the exemption limit was ;^^225 (in 1936-38).
SOME CONSTITUENTS OF THE NATIONAL INCOME II5
and under 65 years old) whose income does not exceed ^^250
per annum are included. The total, less wage-earners, should
then give the number of salaried with incomes under ;^250, and
this can be checked against the special study of salaries. But
little reliance can be placed on this figure, since it is the
difference between two large numbers, that arise from different
sources with many slight variations in detail, and the difference
is only some 10 per cent of the total. Thus an unknown but
possibly large proportion of the difference may be due to variety
of definition. In any case, when we come to weld this number
with those based on A and C, we have again the difficulty that
incomes in A include those from property as well as earnings,
and merge husband’s and wife’s income. Also A includes
incomes derived solely from property.
For these reasons no attempt is made to re-work in detail
Mr Colin Clark’s estimates.^ They depend on bold hypotheses
whose adequacy can only be partially checked, and for the
reasons discussed above it is impossible that the picture can
have anything approaching the accuracy suggested by the neat
tables given to decimals of percentages. Work over the same
ground shows that, when the uncertainties are allowed for, the
picture is so blurred as to be only suggestive of broad results.
ESTIMATES BY PARETO^S LAW
Pareto’s so-called Law of Income Distribution can be written
f where N is the number of incomes over £xy and A and a are
constants. The total amount of income over £x is then
x^-'^,Aaj{a- 1 ) and the average income above x is xaj{a-i).
The number of incomes between Xi and X2 is A {xi'^^ — = X
and their aggregate is A aj{a'-i) = T.
Hence if we know X and Y we can eliminate A and deter-
mine a.
It has been found that Pareto’s formula fits the British super-
tax statistics in many years except that there is some deficiency
in the highest incomes; but for the year .1931-32* with which
we are here concerned, the deficiency is found for incomes above
^10,000 or £i%ooo.
It is reasonable to suppose that the formula which covers
incomes from ^1^^2,000 (the lower limit of super-tax) to 3^10,000
I fiational Income and Outlay, v,
8 ^
Il6 SOME CONSTITUENTS OF THE NATIONAL INCOME
can be used for the upper part of the range below £2^000. To
project it downwards all the way to £250 is known by ex«
perience^ to be very hazardous, but since it is the only kind of
hypothesis available it is worth examining whether the results
are consistent with what is known of the total number of
incomes and the number under £250.
In the equations given above, with = 2,000 and X2 = 10,000
we know from the super-tax statistics that
Z== 87,028, 7=320,192,000 {£).
Solution by approximation gives a = i *50. In order to show
how the numbers are affected by varying fl, the results are given
also for a= 1*55.
Incomes Estimated from Super-tax Statistics^ 1931-32
Income
Actual
1*50
1*55
range
Number
Amount
Number
Amount
Number
Amount
£
250-2,000
2,000-10,000
10,000 or more
87,028
7^059
1 1
2,066,400
87,041
8,549
£inn.
i >346
318
256
2,183,000
86,831
7»8 o 9
£ mn.
1,142
331
220
Here it is seen that the actual numbers above £10^000 are
much lower than those computed. Between £2^000 and £ 1 0,000,
Income range
£
Number of incomes
Actual
a=i’50
2,000-2,500
25.572
27,180
2,500-3,000
16,577
16,370
3,000-4,000
18,746
18,250
4,000-5,000
10,149
9,620
5,000-6,000
6,123
5,770
6,000-7,000
■ 3.865
3,800
7,000-8,000
2,655
2,660
8,000-10,000 ■
3.341
3.391
10,000-15,000
3,709
3^787
15,000-20,000
1,364
1,738
20,000-25,000
701
861
25,000-30,000
375
518
30,000-40,000
3 %
• 576
40,000-50,000
184
305
50,000-75,000
189
348
75,000-100,000
57
149
100,000 or more
97
167
I ‘The British super-tax’, Qmrterly Journal of Economics^ ^9145 PP* 255 seq.
SOME CONSTITUENTS OF THE NATIONAL INCOME II7
= I *50 fits the data wellj except that there is an excess below
^2,500, possibly due to a leakage of incomes liable just above
the lower limit.
Our hypothesis thus gives :
£ 2 ^o-£ 2 ,ooo
Number
2,066,400
Computed
Income
{£ nin.)
1,346
£2,000 or more
94,087
Actual
469
Total £2^0 or more
2,160,500
1,815
With ^ = 1*55 the corresponding totals are 2,277,000 and
;^i, 620 mn. These incomes on the one hand include a number
arising solely from property, and on the other do not count
separately incomes of occupied wives of occupied men. Balancing
these, our hypothesis gives in round numbers 2,000,000 incomes
of occupied persons with £ 2^0 or more per annum.
The number of incomes from occupations below £ 2^0 may
be roughly estimated thus:
Great Britain^ 1931
(ooo’s)
Aged 16-65. Insured for health
15,800
Over 65
500
Under 16
800
17,100
Add for Northern Ireland
400
U.K. salaried and wage-earners
17,500
Workers on own account
900
18,400
The Insurance figures include those unemployed at the Census
date. Assembling these figures we have:
Number of Incomes from Occupation
Under £2^0 18,400,000
,^250 or more 2,000,000
20,400,000
The actual number computed from the Census of Population
is 21,800,000, and considering all the hazards of the estimate
this difference of 7 per cent is not surprising.
But if we proceed in the opposite direction and subtract the
number, 18,400,000, of lower incomes from the total 21,800,000,
we find 3,400,000 above £ 2 ^ 0 , which is very different from the
2,000,000 found by extrapolation by Pareto’s formula.
Il8 SOME CONSTITUENTS OF THE NATIONAL INCOME
In these circumstances there is nothing to be gained by
endeavouring to classify incomes (below £ 2 :,ooo) according to
their amount^ and a good deal to be lost by publishing with
spurious accuracy statistics based largely on guess-work.
In the higher ranges of income, say over per annum, it
is not unreasonable to regard the income recipients as forming
a fairly homogeneous group of responsible adults, most of whom
have dependants with no incomes. But the analysis now rejected
as insufficient relates to such a heterogeneous population as to
have little meaning when applied to all the 20,000,000 separate
incomes. How heterogeneous the group is may be judged from
the following example:
England and Wales ^ 1931
Persons occupied
(ooo’s)
Ages
Males
Females
Single or
widowed
Married
Single
Married or
widowed
Under 2 1
1.989
^5
1,667
21 to 25
1,102
. 224
858
83
25 or over
I 2,239
7,678
1.795
1,188
Total
5.330
7.917
4,320
1,285
Total: Males t3?247
Females 55605
All 18,852
There seems to be no utility in merging in one group the wages
of a girl of 14 years and the income of a married man with
dependants.
The method used by Sir John Orr,^ of estimating the numbers
of families in a graduation where the income is divided by the
number of persons in a family, has a definite purpose and
meaning, and the statistics he gives (pp. 59-60) in round
numbers are probably broadly correct. But they are suggestive
rather than factual, for the Census (on a sample from which
he depended) does not for the reasons given above permit of
anything but rough guesses at income for a large proportion of
tlte families. When the estimate was re-worked on a new sample,
unpublished tables show that a quite considerable margin must
be allowed for the proportions in each group.
I Food^ Hecdih and Income^ 1936, Appendix V.
SOME CONSTITUENTS OF THE NATIONAL INCOME II9
If such an analysis is intended to show the relation of incomes
to needs^ a more refined method than that of assuming that
needs are the same for every individual is wanted. Necessary
expense for a. young child is less than that for an adult working
man. Re-working of the analysis on the basis of assigning
relative needs by age and sex^ and treating a family as consisting
of so many equivalent male adults, modified the table very
significantly, reducing the proportions in apparent poverty or
insufficiency, and while establishing more definitely the existence
in 1931 and probably in 1937 of at least a considerable, number
whose incomes were on any modern standard insufficient,
showed also that the proportion whose income was adequate for
health, if spent with reasonable prudence, was greater than that
suggested (but not definitely affirmed) by Sir John Orr’s analysis.
NOTE ON THE VALUATION OF STOCKS
AND PARTLY FINISHED GOODS
The profits of a company, after allowance for depreciation of .
plant, may be in part undistributed and used as a reserye, or
employed in increasing the physical capital or stocks of goods.
Undistributed profits are normally included in aggregate in-
come, and for consistency they should be adjusted for any change
in the values of stocks of materials or of partly finished products.
When prices of materials are changing at all rapidly, there is an
ambiguity, which may be important, in the value to be attri-
buted to them.
In the table on p. 81, in the amounts included under Schedule
D of the Income Tax (and also in Chapter in on the Census of
Production Returns), a manufacturer is entitled to reckon stocks
either at their cost price or at the change in their value from the
beginning to the end of the year. Since he will probably take the
lower of tlie two estimates, in times of changing prices the resulting
income is lower than it should be, on some definitions of income
and higher on others. Since importance has been attached to this
inconsistency by Mr Colin Clark, ^ Mr Kuznets^ and others, it
is well to define and examine the problem.
Write pQ , Pi for the prices per unit of a materistl in stock at the
beginning and at' the end of a year, and qi for the quantities.
The analysis is easily adjusted to the usual case when there is
more than onq^kind of material.
I National Income and Outlay^ 1937. s See ref. in Addendum p. 53 above.
120 SOME CONSTITUENTS OF THE NATIONAL INCOME
The most straightforward method is to write
^o?o
for the addition to (or subtraction from) income during the year
due to the change in the value of stocks.
To estimate the difference between X and the income-tax
method some assumptions are necessary. Suppose that purchases
and production are distributed uniformly through the year.
Write q for the amount of material used in a year, sq = q^ for the
initial stock, and bq for the amount purchased. Then
q^=.q{s + b-l).
Assume that the materials are used m years after they are
purchased, where m is a fraction (| if the interval is 4 months).
Assume that prices change uniformly during the year and that
P\ +0-
Then the increase (or decrease) in the value at cost price is
Y = [sqp '^ -f bq{pQ + ^rp^) -qp^{i ^rl2-mr)']- sqp '^ ,
where pQ is the average price of the original stock.
Here the second term in the square bracket relates to the
purchases at their average cost and the third term to the con-
sumption at its average cost at the time of purchase.
Clark I takes as the objective, by arbitrary definition, the
net increase in value of stocks reckoned at current prices, which
he interprets as
Z=p{qi-qa),
where p is the average price in the year, =/?q(i -f r/2.
The differences between these reckonings may be written
X-Y^{s + \{b-i)-m}r,qp^,
X—Z—{s-\-\lb — i)} T.qp^y
Y —X—mr,qp^,
Thus Mr Clark virtually assumes that
The magnitude of the differences may be judged by the
following illustrative table. In it the multiple of a year’s con-
sumption in stock at the beginning, is taken as from i to
the interval between purchase and use, as J or and the
multiple of a year’s consumption that is purchased in the year,
as from I to i|.
The values are ^ven, as percentages of the value of a year’s
consumption at the initial price, in the cases a price rise of
i Loc* cii. p. 293 . Mr Kuznets takes the same definition.
SOME CONSTITUENTS OF THE NATIONAL INCOME 121
10 % and of a fall of lo %. Since each column’s entries contain
r as a factor^ the signs are reversed in the right-hand part of the
table. 10 % is an unusually rapid change. The effect of other
percentages can be obtained proportionately.
Percentage of annual consumption^ valued at initial price
Prices rising io% p.a. Prices falling io% p.a.
t '
A
r
s
m
b
X-Y
z-z
x-y
i
?
4
- 1-25*
+ 1-25
+ I-25t
-1*25
( d )
I
0
4- 2-5
0
-2*5
+ I-25t
-^3*75
- I •25*
-3-75
X
■4
¥
+ I-25t
+ 3-75
-1-25*
-3’75
I
+ a-5t
-f-5'O
-2-5*
-5*0
i-i
+ 3-75t
+ 6-25
-3-75*
-6-25
X
1
-1-25*
+ 3-75
+ f25t
-375
( d )
I
0
+ 5-0
0
-5-0
+ I-25t
+ 6-25
- 1-25»
-6-25
i
i
+ I-25t
+ 6-25
- 1-25*
-6-25
I
+ 2-5f
+ 7-5
-2-5*
-7-5
+ 3-75t
+ 8-75
-375*
-8-75
X preferred, f Y preferred by manufacturers -
{d) Conclusions differ from Mr Clark’s.
When X is greater than F, we may expect the manufacturer to
prefer F, and vice versa. The preferences are marked with * or f •
Mr Clark reaches a different conclusion, viz. that with rising
prices Z is preferred, being less than X, and that with falling
prices X is preferred. In our notation this is equivalent to taking
s>\[i—b)^ which may normally be expected, and m = o. But
if m is not zero, the condition is — m > |( i — &) , and Mr Clark’s
conclusion is negatived in the lines marked [d).
There is no sufficient information to make a general and
accurate estimate of the proportion that the value of the stock
bears to the profit of manufacture. But on any reasonable
assumption it would need a very rapid movement of prices to
make the adjustment from F to X have a significant effect on the
estimates of National Income given in this chapter — ^significant,
that is, when the margin of imcertainty of the total is already
considerable. The years that might be affected in our period are
1926, 1930, 1931, 1937 and 1938.
In Cmd. 6347, Table I (see p. 53 above) the, quantity Z-X
is added to the earlier estimate to correct Schedule D. This
quantity is evaluated at 135 mn. (See Economical 1941 Maizel,
1942 Bama and 1943 Bowley.)
Chapter III
THE CENSUS OF PRODUCTION
This chapter is divided into four Parts. The first deals with the
statistics of Output and Employment, published in the Census
Reports for 1924, 1930 and 1935. The second examines the
relation between these Census results and total National Income.
In the third Quantities, Prices and Efficiency in the Census
years are considered. In the fourth an Index of Production for
each year 1924 to 1938 is compiled. Details relating to the
chapter are to be found in Appendices, pp. 157-79 below.
Since there have been changes in classification and contents
in the successive Census publications (see App. i, p. 157) and
unofficial writers have made adjustments^ for their own require-
ments, some of the figures quoted in the tables of this chapter
appear to show discrepancies. Within each table comparability
has been preserved.
1 . THE CENSUS RESUETS
The Censuses cover Mining and Manufacture, Building and
Contracting, including engineering production by Railway
Companies, work undertaken by Local Authorities, and pro-
duction for Defence Services and other Government Depart-
ments. Agriculture is excluded. Transport of materials from the
mines, ports or other factories to manufacturers is included in
Gross Output, but is subtracted with the cost of materials to
obtain Net Output. Transport to consumers is excluded.^
Gross Output is the aggregate selling value of goods as they
leave the mines, factories, or their employees if they undertake
delivery. Net Output is obtained by subtracting from Gross
Output the value of materials, partly finished goods, coal, etc.
These materials (if not imported) are already included in the
returns of other factories or mines, or are to be accounted for
in agriculture. Net Output is sometimes termed "the value
added by manufacture’. This value is the total for the firms of
rents, royalties, interests, rates, salaries, wages, advertisement,
allowances for depreciations, and profits, including undistributed
profits. These are all constituents of national income, fexcept
that depreciation and rates may be subtracted or treated"
differently under different definitions.
THE CENSUS OF PRODUCTION 12$
Government Production includes no profits, except possibly
those from some services rendered by Local Authorities.
In the accompanying tables the values stated exclude pay-
ments to the Government in the form of excise or customs, since
they do not become personal income, but they include subsidies,
since these are divisible among the owners or employees. In
the table on pp. 166-7 inaterial is assembled which makes it
possible to treat these sums so as to correspond with other
purposes or definitions.
The Censuses of 1930 and '1935 were confined to firms
employing more than ten persons. In the table the figures for
1924 have been made comparable by excluding any such firms
as were covered at that date. But in each Census material is
available by which estimates can be made for the output of and
employment in these small firms.^ The details are discussed
below (pp. 174-9), while the results are included in the
accompanying table. This table deals only with large industrial
groups, the contents of which are shown on pp. 157-161. The
order and arrangement of groups is that adopted in the Census
publications with some additional sub-divisions.
The numbers employed include here all manual workers (or
operatives) and salaried persons (or administratiye).
The results may be summarized thus:
i
Value
£am.
' Number
Value
Percentage changes
i
1 employed
, (ooo’s) '
per head
£
Value
Number
employed
! Value
per head
^924
mo ;
2935 1
1,668
1,640
1.759
1 8,036
1 7.952
: 8,019
208
! 206
; 219
j 100
1 9^*3
I m'5
100
99^
99’S I
100
99
106
How these figures are affected by the change of prices is dis-
cussed in Part III (p. 136 seq.).
The Table B, p. 126, indicates the relative importance of
each group in the total of industrial production. There
have been significant relative increases in Building, Timber,
Chemicals, the Metal Groups, Food, Paper, and Group XVIII,
and decreases in Coal-mining, Textiles. The remaining groups
show little variation.
I Since there is special uncertainty about the numbers in small building
firms, a margin of error is assigned to Group HI.
Table A
Census of Production, Net Output and Numbers Employed in 1924, 1930, 1935
! S i
I o ■
i'l I
I ^ '
— « rM^-Ao:imt^crj»-'inc7)Oc£><jicocfcoiooor'» iTiCO to '^co •-< co w
ss b loco CiO cocns>- r^co ^ co or coco m m uoco iioc£>
Q X I 0» 05 r>» t^X 05 '-«»^ 0 [i! 0 «j 0 i 0 ^*-^ 0 j^*-‘*^*^c^^c^
3 * 7 ^
O I
CD O
or Of *-«
tc Cl uox X *-• CO in '-' 01 CM ■C5X CM o CD -^co cm «n 05 -^x x i>- ^ ^
tnx r>. <->-**-< X X XX x-^o
&c 2
s S »')
r' Cl Cl r^x XX cxx ^05^ 05'D tn x o or oi ^ moo cd hm xx
05 X'D X X !>• Of i>*X !>• I> 05 CD 05 XX l>-0 *-• CMXX m'*!ihTi^mr^05X
•-•C 5 r^ cDXX^*^*-‘'^’ 7 ^mo 5 O»-'*--'-''-< 0 fOO
01 mcD
xcD'^ 05^^ xw !M cf ^Mcp mco Of o ^mg 5 CDCD m
b X « r'^b CD b5cb X xx cf ^ m f^cb cf m 6 6 ** ' ’ ^ ^ ~
*-* X Cl *-1 CD 05 o 05 csr ^ ci cm x w mx
CfH**^ OCfX i-CMCMOl Cf'-<^-<
^ « b
05
Cf ^ 050X
h-. « *-. 050 05
il"
MtS
X X CM »-« mx
b b 6
}
w mcD
^Cp « >;;<CDCpCp Xm XN
X X ^ mx m X mob oixwcocrcf*- ^ •^xcir^
^ ^ ^ CfCMM
cp o X
b
Of X m
0 4
taD S
r^cp p5Cp X xw a ocp p5^t^^m^o x« m psop ^ mx or i>. or o
g5cb bcbx m'^b5b„.m«xcb «xcb b b5mxb5M b 6 mcb ^
Of X -^x l>x C75 <05 *
CDX'st^Cf Of CM Of Tf'm*-'
Of 01 Of
’’fo m-^o m’liio m-'i^^o m'lj^o m-^o m^o m^fo m'^o m-^o m
Of XXOI XXOI XXCf XXOI XXOf XXCf XXOf XXOf XXOf XX
0505<05C5(05 05 a5050)<050505'0505C0505C?5a5<0505C05C35C3505050505050505
a
3
s
iso
3
"S
3
ho
3
flj
O
cr
no
3
3
05
§
<u
X
^ o
wT
S ^
tiO *S
.Sx Cu
^:3 ^
cct Oi
Q
g
Q
3 ^
X
a
. 3 *^
•r* TJ
^’l
« «
05
s .
05
§
•3
I
4 J
a
3
X
+-»
o
a
X X
r^ct incor>.o mco i>‘>-' ^o a »-* r^-o et^vOco w cn ! 'o o< a
CO a ^ r^CO -^COf^HK CO'^i^tOiOCOCO'^e^CDCQ lOtO ■^«0‘^^C5C50 . COiO>^
<-'CtO<CO'«^ri^ '-'•-‘•-'•-•WOlCHWNWNCi ’-■ '.OClO
CO rCco
CO c«
0)050 ^
cn ct 05 a> CO CO *-•
CM coco
rf^ cor**!^
i C0 o e?
cnco .
C£> t^CO
CO o m coco co r^coo r^wcoco ci r^t^coci •-« »-• t^-co cocmcoccco co*-*!^
CTjCI r^O O O coco co '^CO O -ri^uoto*-* CM (MCO CM lOCO ■^»-'<35CO'-'C7 iC750
(MCOCO'-'*-*^-' i-*-..-tCOCO*^ »*<*-*i-ih-CMCMCMCMCM^(MCM *-t CMwtt-*
CO CM lo ^co cp o> CO ^ a ^cp to ^ w gjcp cp v^«cp ^ 9^ 'P 9 T^r r*^ ^
Oi iodb b do Cncf uocb 6b ^ ^ af'.cotbo oscb ^
O *-• CMCOCD t^W COW C0'<t‘'^050 ►-« « »-' COCOCOt^O*-* '^h'^COCOCOCO^^ *-• CM
CO o cr>
CO 'Cj-io
coco 1>*
CM CO Cisco CO W pxo UO ^ «P IN M ^CO OS W W ^ ,
oscb Gici^^bbbs^b cn^ in>^ b b 6 ^ « w cococoj
T^CN lO
+1 +1 +1
^ ^CO CD tptp CO p'CX) CO
ib CM CD N ^-l<cb di cococo*^ coco oscs^osmoo co cocb ^
CO OSOCOCOCO CM COCM CM COCOOSQ O •-• « -< CM CM CMCO OO Tj^'sfCOCOCOCO*^ CM
■^O i 0 rf *0 * 0*^0 i 0 t 3^0 lO'^O lOri^O tO'^O iO*si^O lO'd^O 10*^0 wO'^fO tO
CM COCOCM COCOCM COCOCM COCOCM COCOCM COCO<M COCOOM COCOCM COCOCM COCOCM COCO
o>cr>oscr>osc 3 so>C 7 )Osc? 5 Cocsoscr)COcr)Os 050 soscr 50 CDcr>cDCJ 30 scr 50 sCDoscrso>
CCS
com'
05
u
CCS
V
1
.1
-S t
05
§
V
[S
“S
'^+ 4 .
§g
*n
c
jd
p
s
! 05
TJ
0
.1
0 •
0
0
CCS
u
V
1
ag
*4*. 2
V 43
pH«i
u
V
1
J
1
00
0
Ji
*4)
s'
0 cS
ri
1
'««
u
I
CO
1
i
4-^
0
H
i§
c5
H
'f
{1|
p£^
0
0
i4
0
g
1-4
><
XIIL
XIV.
XVI.
XVIL
XVIIl.
X •
X
XXL
j
i
1
[
i
* Nearest 3^100,000 or nearest 1,000 j^ersons. ^ t Large firms, more than ten employees; small firms, ten or fewer.
J Production by Transport Undertakings (Engineering and Construction), not cost of or persons concerned in actual movements
of persons or goods.
Table B
THE CENSUS OF PRODUCTION
127
2 , THE CENSUSES OF PRODUCTION AND
TOTAL INCOME
The Census of Production of 1930 accounted for rather less than
half either of the income of the United Kingdom or of the total
number of occupied persons. It relates to physical productions
of goods up to the stage, where they leave the mines, factories
or the farms. To obtain the selling values of the goods to the
final consumers we have to add the cost of transport before and
after manufacture and the incomes of merchants, distributors
and dealers. Total income includes also that arising from
personal, professional and other services, and. from the direct
use of houses and other property. Another item that must be
included at some stage is the income of some 1,300,000 persons
who were in 1931 working on their own accoimt directly for
customers.
There are ofiicial or semi-ofiicial estimates which account for
part of the gap between the Censuses of Production of 1924 and
1930 and total income, and for 1924 (as for 1907) Sir A. Flux
made an estimate which accounted for the residue of income.
No corresponding estimate is available for 1935.
1. NET OUTPUT
;^mn.
Net output of industry :
1924
mo
Larger firms*
U549
1.505
Smaller firms
121
134
226
Agriculture, forestry, fishing
248
Waste products re-worked
16
12
Total home Net Output
* Employing more
L934
than ten persons.
1,877
The procedure for estimating the Net Output of Agriculture,
etc. here included is as follows :
£ mn.
1924 1930
Gross Output: Agriculture*
297
254 *.
Small holdingsf
18
^ 5 i
Forestry
2
Fishing
20
Total
337
290
Less: Imported materials
34
25
Materials from industry
55
39
Net Output
248
226
Holdings of an acre or more,
f Including allotments and gardens.
128 THE CENSUS OF PRODUCTION
The materials obtained from Industry (fertilizers, feeding
stuffs, etc.) are already accounted for in the net output of
Industry. Industry also obtained materials from Agriculture,
etc. (estimated at ^98 mn. in 1924 and £80 mn. in 1930), the
value of which is included in the net output of Agriculture, and
subtracted from the gross output of Industry.
11. SELLING VALUE
Industry and Agriculture
£ mn.
1924
1930
Net Output
L934
1,877
Imported materials: for industr>’
660
483
for agriculture, etc.
34
25
Transport of materials
96
72
Value of home-produced goods
2,724
2,457
Imports: value on arrival
444
449
Customs and excise
227
235
Selling value of goods for home
use or export
3^.395
3.14^
Less exports
743
535
(Wholesale) selling value of goods
for home use
2,652
2,606
This selling value is as at the time the goods leave the mines,
factories or farms or as imports reach the docks.
The statistics so far given are in nearly every case taken from
the Final Report of the Census of Production (1930), Part V,
pp. 52-4."
The accounts of imports had been scrutinized so as to yield
the following classification:
£mn.
1924 1930
Imports: Materials for industry 660 483
Materials for agriculture 34 25
Ready for use >^^44 449
Total imports 1,138^ 957
Re-exports are excluded from this table.
To obtain the selling value, customs on imports and excise
on production are added.
As regards exports it is desired to obtain the value as at the
factories, while the usual statistics give f.o.b. values. It is also
I Details of the estimates are to be found in the Journal of the Reyal Statistical
Society, 1929, pp. 8 seq., Fiux; 1934, pp. 545 seq., Leak. In the latter some
of the earlier statistics are amended.
THE CENSUS OF PRODUCTION 129
proper to subtract waste products (old iron, wool rags, etc*)
which are not additional output of manufacture.
Exports of British Produce
£mii.
1924
1930
Value at factory
743
535
Waste products
2 h
Transport and lading
55I
332 -
Value f.o.b.
801
57 J
Many of the items included in the totals, especially those
relating to transport, are rather rough estimates, and the final
results given in the Census of Production Report are 1924,
± 28 mn.; 1930, £2^606 ± 26 mn.
III. TOTAL INCOME
In his Presidential Address to the Royal Statistical Society
{Journal^, iQ2% p. i) Mr Flux estimated the National Income
in 1924.^
For the items already discussed he arrived at a total £2^6$^ mn.,
instead of ;^2,652 mn. as amended above. His further estimates
can be arranged as follows :
£xrm,
1924. Selling value of goods 2,635 ± 35
Less depreciation of capital 305
Net ^ ^ 2,330
Transport, distribution, dealing 945 ± ^35
Houses and services 650 ± 50
Increase of investments abroad 50
National Income 3>975i:225
The allowance for depreciation, which excludes replacement
and maintenance carried out by employees of the establish-
ments concerned, is provisional and should have a margin of
error assigned to it.
To obtain the cost of distribution, percentages are assigned
to two or more broad classes of goods, and are added to the
5^^2,635 nm. to obtain the value of sales to final consumers. The
author considered that the large margin allowed was sufficient
to cover the uncertainties of the data.
The basis of the estimate for the annual value of houses and
services is not explained in detail. It covers (i) value of
dwelling-houses, hotels, schools, etc., 5^^225 mn., (2) domestic
I The corresponding estimate for 1907 is given on p. 48 above.
BNI
9
130 THE CENSUS OF PRODUCTION
and hotel service, 5^;i20 mn,, (3) passenger transport, less cost
included in the Census, (4) postal service, other than that for
business, (5) professional and artistic services, excluding pro-
fessional services rendered to business, and excluding services
tendered by persons in the employ of the central or local
governments
The last item in the table is obtained by subtracting from
the total of £86 mn, the excess of exports over imports, the value
of ships' stores and fuel and certain financial services already
included in the value of goods.
No explanation or discussion is given for the exclusion of the
value of services rendered by Government employees. It appears
to exclude the incomes of the main body of teachers,^ for
example, and not only officials who may be considered to be
aiding industry or commerce. For the discussion of this,
reference must be made to our earlier chapter on Definitions
and the later chapter on Real Income. Since there were con-
siderably more than a million persons employed in Gbvernment
service, their inclusion or exclusion is of considerable importance.
In the discussion on the paper Stamp considered the
possible causes of the not very great difference between this
estimate (;^35975 ± 225 mn.) and that more recently published^
(^3,800 ± 100 mn.) by the method of aggregating incomes.
He finds three possible reasons:
(i) In the Census of Production method the value is of goods
produced in a year; in the Income method it is nearly the value
1 This part of the Address in 1939 was based on the analysis given on p. 33
of the Final Report of the First Census of Production of the United Kingdom
(1907), published in 1912. The relevant passages are:
‘The classes of income to be included in the total of remimerated services
now to be brought into account include mainly the following:
‘vi. Central and local government services, the receipts for which
(exclusive of rents, post office, water, gas, electricity, tramways, loans, and
sale of property) amounted in 1907/8 to about ^216,000,000, about
£81,000,000 of this total being loan chaiges and repayment of loans. Out
of the remaining £135,000,000, however, £69,300,000 represents Customs
and Excise duties and licences included in the value of goods, and £30,000,000
is, covered by value of work included as output for Census of Production
purposes.
‘vii. The income of the professional and artistic classes, other than,
doctors, teachers, etc., in the employment of the State or of Local Authorities
— ^that is, the clerical, medical, teaching, literary, scientific, artistic, musical,
and dramatic professions ; and the engineering, surveying, banking, insurance,
and legal classes, except in so far as their services were rendered to manu-
facture or distribution and have already been taken into account.’
2 Th Nntioml Incrnne^ ^924, Bowley and Stamp.
THE CENSUS OF PRODUCTION I3I
sold to the final consumer. The change in the value of stock
between the beginning and end of a year may be important.^
(2) The treatment of depreciation for income-tax purposes
differs from that in the Census of Production method, especially
since in the latter goods used for replacement are not counted
as income, while the income-tax assessment is based on the
value of the plant, etc., independent of the method of re-
placement.
(3) In the inclusion of indirect taxation some part of transfers
of income (without corresponding services) is counted as income.
It may be added that the near consilience of the totals, which
come to a large extent from different sources and which
necessitate a great deal of rather arbitrary estimating, and
which in minor cases use different conceptions of income, is
very satisfactory.
But in spite of this agreement it is necessary to consider
whether the two measurements have really the same objective.
Let us go back to first principles. ^The labour and capital of
a country, acting on its natural resources, raise annually a joint
product consisting of a certain net aggregate of commodities,
material and immaterial, including services of all kinds. This
is the true net annual income of the country.’^ ‘The terms
National Income and National Dividend are convertible/ ‘The
National Dividend is at once the aggregate net product, and the
sole source of payment for, all the agents of production within
the country; it is divided up into Earnings of Labour, Interest of
Capital, and lastly the Producer’s Surplus, or Rent of Land
and of other differential advantages for production. It con-
stitutes the whole of them and the whole of it is distributed
among them.. . .’3
We have thus the equation :
National dividend = National income = Earnings, interest
and rent = Sum of incomes of individuals.
We may leave aside for the present purpose many of the
problems of definition discussed in Chapter i, such as income
accruing abroad, unpaid services and the use of possessions
other than houses.
1 That is, stock in the possession of merchants and retailers. Changes in
stock in the factories, etc. are allowed for in the Census of Production method.
2 Marshall, Principles of Economics, 1907 edition, pp. 76 and 79.
3 Marshall, Economics of Industry, 1894, p. 257.
4 Bowley, Economic Journal, 1929? P-2.
9-2
132 THE CENSUS OF PRODUCTION
Mr Flux undoubtedly aimed at the selling value of the ‘net
aggregate of commodities, including services’. His estimate may
be re-tabulated as follows :
1924 £ mn.
Census of Production: Mining, industries, agriculture
Consumers’ w^ste products exported 2
Transport and distribution i?095
Imports less exports 337
Customs and excise ... ... ... ••• ••• 227
Houses ... ... ... ... ••• ••• 225
Services ... ... ... ••• ••• 4^5
Selling value of products and services 4,228
Less depreciation 3^5
3.923
Income accruing abroad ... ... 5^
National Income* 3>973 ± 225
* There is no indication that account was taken of the value of the products
of persons (such as carpenters, bootmakers, dressmakers) working on their
own account without paid employees. There were about 330,000 such
persons in 1931 (or 300,000, excluding outworkers who may have classed
themselves as working on their own account) and their income was probably
between £^o and £^o mn. This is additive to the National Income, unless
they are already included in the composite item services.
The equating of the selling value of products, etc. to the total
of individual (and corporate) incomes assumes not only that
there was no significant change in the value of goods in the
possession of merchants and dealers as between the beginning
and end of the year (as Stamp pointed out), but that all income
is spent during the year or deposited in such a way that it was
at once turned into physical capital — ^in brief, that saving is
equivalent to spending. It would need a difficult investigation
to find out whether this was approximately true for a single
year or whether the lag between saving and its investment was
sufficiently regular to allow us to neglect it over a period of
years. Similar considerations apply to undistributed profits of
companies.
A more important question arises firom Mr Flux’s treatment
of Government service. Included in the Census of Production
aggregate are the values of the physical output of the Central
Government (dockyards, arsenals, etc.), that is, ^pTigmn. in
19^4? of Local Authorities (roads, buildings, etc.) amounting
to £q 6 mn. The employees included numbered 96,000 and
200,000 respectively. But under "services ’ all other Government
employees were excluded. We have no statistics for their numbers
in 1924, but an idea of them can be obtained in 1930 or 1931.
THE CENSUS OF PRODUCTION
^33
Census of Population
Employees
(ooo’s)
1931
Defence 382
Central Government 357
Local (k)vernment 588
Police 67
Teachers’*' 231
Nurses 152
1.777
* Employed by the Central or Local Authorities.
Discounting the numbers of nurses so as to exclude those
employed privately, there were in 1930 about 1,650,000 persons
in public employment, of whom about 350,000 (allowing for
services rendered to industry) would be included in the Census
of Production.
None of these was paid directly by' private individuals or
groups of individuals. Their payments are met out of taxes and
rates,, and it is not clear why dockyard and arsenal workers and
road-makers and builders are treated differently from ad-
ministrators and Government clerks. Even if it is argued that
the army, navy, police and central and local administrators are
regarded as an expense properly attributed to industry, the
same can hardly be said of teachers and nurses, whose services
in any case cannot logically be charged to industry if they are
public employees, while if in private employ they are chargeable
to individuals. Stamp appeared to take the view that customs
and excise (entered in selling value) were implicitly balanced
against public services in Mr Flux’s reckoning, and indeed the
^227 mn. under this head might be of the same order of
magnitude as the expense of these services; but if there were this
equality it would be accidental, since direct and indirect taxation
are merged in the national accounts, and several classes of
services are borne partly on rates and partly on taxes. We cannot
say that direct taxation and rates on private premises’^ are
transfers of income, while indirect taxes are for value received.
So far as can be ascertained, Mr Flux did not deal with these
questions explicitly in his estimates based on either the 1907 or
the 1924 Census, and his line of reasoning must remain obscure.®
1 These latter are not brought into Mr Fluxes account.
2 At the time of writing Sir A. Flux is in Denmark and beyond the reach
of correspondence*
Census of Production
Employees in
physical output
(ooo’s)
^930
91
242
333
134 CENSUS OF PRODUCTION
The most direct balance should be found between the total
of goods and services that are paid for by individuals and groups
of individuals at their selling value, as reckoned by the Census
of Production method, and the total income of individuals and
groups less taxes and rates.
Then in 1924 the Census of Production method gives
£35973 £5^ (workers on their own account) —
£it^ mn. (Government products) ==£3,900 mn. (±225) ap-
proximately. On the income side we have £45^73 the
aggregate of incomes including pensions {Statistical Journal,
1940, p. 517, Total A), less about p(;6oomn., direct taxation
and rates, which gives about ^^3,700 mn. ±£100 mn. Thus
these rather hypothetical rectifications leave the relative position
of the two estimates very much as Stamp put it (p. 130 above).
We may usefully compare these estimates with the study of
consumption made by Mr Feavearyear in the Economic Journal,
1931, pp. 51-60. His final table, abridged, is:
Average Annual National Expenditure, 1924-27
£10x1.
General expenditure
3>i40
Saving
400
Cbmpulsory insurance
S5
3.625
Direct taxation
375
4,000
The average of the' Totals A for these years {loc, cit.) is
3^4,200^ {±£100) mn. These totals may contain some small
items which are excluded from Mr Feavearyear’s reckoning, but
broadly they should cover the same ground.
Thus the various methods of approach give results which
agree within 5 per cent of each other when the appropriate
definitions are taken. Each contains considerable elements of
approximation, and when reasonable allowance is made for
these it may be held that they are mutually consistent.
The statistics already given show that the physical output of
the industries included in the Censuses of Production and
Agriculture, less the estimate for depreciation, accounted for
about £j j6oo mn. income in 1924, while transport, distribution,
houses and services accounted for about £1,750 mn. In 1930
the totals and proportions were nearly the same. Thus material
I SufotxactiBg Income due to Foreigners (;^25 mn. per annum).
THE CENSUS OF PRODUCTION I35
production was valued at less than services and the direct use
of property. It is therefore natural to consider the number of
occupied persons concerned in direct production and in
rendering services. The closest comparison available is between
the Census of Population of 1931 and that of Production in
1930.
Approximately on the average through the year 75952,000
were employed in industry and mining, including small firms
and outworkers, according to the Census of Production. From
the Census of Population the number occupied (excluding
unemployed) in this group was about 8,070,000, to which we
should add about 570,000 employed in production for Public
Authorities, making 8,640,000. The excess is partly to be
explained by the inclusion in the larger total of about 355,000
employers, directors or managers, and no doubt some persons
who did not state that they were out of work, though in fact
they were in ^n interval between jobs (see p. 103). On the
other hand, in April 1931 about 400,000 more persons were
unemployed in these groups than in the average of 1930, and
after all allowances the Census of Population gives a slightly
higher total than does the Census of Production. Since the
difference is not very great, we may use the Census of Population
to get a broad view of the relative importance of physical
production to services.
United Kingdom, ig$j, Number of Occupied Persons. Estimated
from the Census of Population
(ooo’s)
Industry, mining
8,400
Agriculture, fishing
i,ido
—
9^500
Transport, seamen
1,300
Commerce, dealing
2,300
3,600
Services, ileither employers nor employed ^
1,000
Government, Centr^, Local, Defence, Police
1,400
Teachers, nurses
400
Banking, finance
400
Professions, entertainments
600
Personal and other services
2,300
6,100
—
Total
19,200
Unemployed
2,600
Without occupation
24,300
. Total population
46,100
THE CENSUS OF PRODUCTION
136
'Unemployed’ of course means following some occupation
but temporarily without a job. 'Without occupation’ includes
wives, not worMng for pay, children and aged, etc.
Thus physical production accounted for about 50 per cent
of the occupied population, transport and dealing for about
20 per cent, and administration, defence and services for about
30 per cent.
3 . THE VOLUME OF PRODUCTION
CENSUS DATES 1924, 1930, 1935
In the Final Report on the Fourth Census of Production of
the United Kingdom' Chapters m and iv relate to the
Index of and the Volume of Production. We will write Q for
the number of units produced of any commodity in 1924, P for
the price per unit in the same year, V=FQ for the value, q, p, v
stand for the corresponding items in 1930.
Two methods are available. (A) We can re- value the goods
in 1930 at the prices of 1924, or (B) we can re-value the goods
^924 tbe prices of 1930. Each method eliminates price-
changes.
(A) gives foj. index of quantity.^
/j IS the weighted average of the quantity ratios, the weights
being the values at the first date.
The index of prices most closely related to Jj is
^S{qp) S{v)
■‘2 T/ • ~ cTTm — oTTsr
(B) gives similarly
V I S{qP) S{vPlpy
' S{pCl) SivQfqY
^ S{0) r _S(VPIP)
5'{F)
Irnng Fisher’s ‘ideal index-numbers’ for quantity and prices
are and ^(^*4) t*espectively.
Unfortunately these methods cannot be applied to the data
ot the Censuses of Production without considerable elements of
approHmation and hypothesis. Quantities are, necessarily, only
stated for a proporfon, large or small according to the nature
ot the goods, of the commodities produced in each industry,
r Part V, General Report, 1935.
2 ^and/areusuaUymultipKed by loo to give percentage index-numbers.
THE CENSUS OF PRODUCTION 137
It is necessary to assume in one form or another that the quantity
index computed for the measurable goods in each industry can
be applied without serious error to the whole of that industr>".
Though for some industries this procedure is very risky, it may
be expected that the uncertainty will be less when all industries
are combined.
The well-known distinction between Gross Output and Net
Output has great importance in the computation. Gross Output
is reckoned on the basis of the selling value of the goods as at
the time they leave each producer. Thus yarn is included at the
price at which it is sold to the manufacturer, without deduction
of the cost of ’the raw cotton, and the piece-goods are included
at their selling prices without deduction of the cost of the yarn.
There is consequently a great deal of re-duplication. To obtain
Net Output each producer deducts all his expenses of raw
materials and of partly finished articles.
In the General Report for 1930, Appendix 11 , the basis of
calculation is Gross Output, and the method (B) is employed.
In each of over 130 industries the value of the Gross Output
in 1930 is compared with that of 1924 re-priced ^at 1930 average
values’. Each of these index-numbers is the result of a similar
process applied to separate products in each industry. Thus for
each industry and group of industries we have the value of Jg •
In Chapter n of the Report, however, a different process is
followed to obtain a general result applicable to all industries
together. Here (p. 43) the basis is Net Output of fourteen large
industrial groups in 1924. The net output, for example, of the
Iron and Steel group in 1924 was 5^98-6 mn. The index obtained
from Appendix II is J2= 1-026. The product of these, viz.
£io 1'2 mn., is described as the "Estimated net output in 1930
on basis of 1924’. The result in its simplest form is
S^FQ'x^yS{P'Q’),
where P\ Q' refer to the net output in 1924. On the assumption
that for each industry the index of volume pqipQ, based on
gross output, ’equals with sufficient approximation p'q'lp'Q'^
based on net output, this result is
5(P'Q' x^}j jsiP'Q') ^S{P'q')iS{P'Q')=^J'-
All the letters with ' refer to net output.
THE CENSUS OF PRODUCTION
For the tables, pp. 147-1 50 below, however, a more elaborate
method was adopted. Each of the 130 industries was taken
separately and it was assumed that for each the change in
quantity (as computed for the Report, Appendix II) was the
same for gross and for net output, that is, that in each industry
the change in the quantity of material equalled the change in
the quantity of the product. Since each industry produces a
range of products, not necessarily in the same proportions in
the two years, the assumption is only approximately true. It
holds, however, with greater validity when we combine the
separate industries into groups, and the groups into a whole,
for this process of averaging tends to eliminate sporadic errors;
but if throughout industry on the average there is a tendency
to use the materials for finer purposes — to put, for example,
more work in making a ton of metal into an elaborate machine —
this is uncorrected, and the index for net output is under-
estimated. There appears to be no statistical means of allowing
for this bias, if it exists. .
The process may be shown by an example :
Leather Trades
Gross Output
1924
Value as
returned
(^ooo^s)
PQ
Valued
at 1930
prices
t^ooo’s)
pQ
1930
Gross
Output
(:^00o’s)
P 9
Index
of pro-
duction
J 2 =g/Q
1930 at
1924
values
PQxJ^=Pq
Fellmongery
Tanning, etc.
Saddlery and
goods
4,718
2,820
30^X40
5 > 3 »o
27,792
I 5>002
ni3
0*92
0*93
5,321
29,638
4,754
Total
42,045
38,340
35,980
—
39,713
Net Output
1924
Value as
returned
(pfooo’s)
P'Q'
1930
Value as
returned
1
1930
at 1924
values
P'Q'xg/Q = P'q'
1924
at 1930
values
yq'^qlQ=P'Q'
»
FeUmongery
Tanning, etc.
Saddlery and
goods
8,444
2,312
516
7,355
2,309
986
7,768
I 2,150
i
457
7,979
2^83
Total
11,629
10,180
10,919
THE CENSUS OF PRODUCTION
1 39
For the group of Leather Trades we have:
Gross Output: Wz=:S{pq) ~ ‘S’ (^6) = 35,980 -7-42,045:= 0-856
Ji-SiPq)^S \PQ) = 39.7 1 3 42.045 = 0*945
Jo-Sipq) ’^S{pQ) =35.930-38,340=0*938
li = S(J>Q}^S (PQ) = 38,340 -f 42,045 = 0*9 1 2
h-Sipq) -^S{Pq) =35.930-^39,713 = 0*906
M^= Jj X is = Jo X /j W'=J/x // = J/ X //
Net Output: W'=S(p'q') =.S(P'Q') = ^ 0,1 80= 11,629 = 0*875
J^':^S{P'q') =*S'(P'Q')= 10,904= 1 1,629= 0*938
J2-S{p'q') = 6’(/<30 =10,180=10,919 = 0,933
/j'= 5 '(i)'Q') = ‘S'(P'Q0= 10,919= 11,629 = 0,939
h'^Sip'q') ^S{P'q') =10,180=10,904 = 0*933
In the above table the first four columns under Gross Output
are the figures given in the Report; the last is deduced by a
process which would be exact if there was only one uniform
product. It may be noticed that the product of the numbers
in the first and third columns equals that of those in the second
and fifth.
Under Net Output the first two columns are from the Census.
To obtain the third and fourth it is assumed that the quantity
change {qjQ) of gross output, as taken in the upper part of the
table, is sufficiently near to q'jQ' as is needed for the lower part.
From these figures indices of value, quantity and pirice are
worked out for the Industrial Group and entered as percentages
to the nearest unit in the tables, pp. 147-150.
The same process is applied to each of the groups. To obtain
the indices of production for industry as a whole the quantities
Pq^ pQ from each industry must be added, but there is no need
to reproduce them. For the totals J^^S{Pq) '^S{PQ)^ and
similarly for the other indices.
From the same data we can obtain two index-numbers of
prices (p. 136) for each industry, each group and the total.
As is well known^ the Index /j (Laspeyre’s) is greater than 4
• (Paasche^s) if the increase in quantities is negatively associated
with the index of price. Such negative correlation is present
when persons with little change in real income aim at economy
by substituting goods of which the price has risen little for those
which are relatively dearer. Whether this takes place depends
I h^S{pQ)IS{PQ), l^^S{pq)IS{Pq). Th^n
and the differences between qjQ^ p/P and their weighted averages
are n^atiVely correlative.
140
THE CENSUS OF PRODUCTION
on the demand for different goods at different price levels.
When applied to wholesale production in the period 1924
to 193O5 there is no clear tendency in this direction. Since
J2 X Ji X / 2 rthen Jj > J2 < -^2 *
We can obtain an estimate for the changes in price of
materials and partly finished manufactures from the same data,
for the price of a unit of finished goods is a combination of that
of a unit of the corresponding material and the cost (including
profit, etc.) of manufacturing a unit. In our notation or
measures the change in the selling price of the finished goods
and /j' or I2 the Walue per unit added by manufacture’.
Write y/j and for the corresponding change in price per
unit of materials or semi-manufactured goods. The formula is
/ _ materials at second date
’’ ^ Cost per unit of materials at first date
_ Whole cost at second date _pQ —p'Q' <
” Whole cost at first date PQ — P'Q' ’
J, (PQ -FQO ^pQ-^fQ'^PQ X I, X //,
and, similarly,
For aggregates each quantity, such as pq^ is summed.
For example, in the illustration from the leather trades,
(42-0 - 1 1*6) =42-0 X 0-912 - 1 1 *6 X 0*939, = 0*90,
rh (39*7 J 0 * 9 ) == 39*7 X <=>*906 - 10-9 X 0*933, = 0-895.
/j is necessarily between // and unless they are all equal.
In all the industries included in the Census this computation
shows a fall of 18 per cent in the price of materials, of 10 per cent
in the value per unit added by manufacture and of 14 or
15 per cent in the price of finished goods.
This fall of 18 per cent may be compared with that of the
wholesale price of materials from other sources:
Index-Numbers of Materials
Board
of
Trade
Statist
f
f
!
Board
of
Trade
Statist
3^924
100*
too
i 1930
100
100
1939: 1st half
, 80
83
j 1934: 1st half
91
88
and half
79
78
1 2nd half
88
^7
1930: ist half
73
j
1 1935:1st half
89
90
2 nd half
66
62 1
2nd half
9T
94
THE CENSUS OF PRODUCTION
141
Since the Census returns were for the most part for the Calendar
j^ar 1930, the figures in the period 1924 to 1930 are only con-
sistent if materials were purchased many months before the
goods were sold; but in the later period where the ^ 1 ^ method
shows a fall of 10 per cent from 1930 to 1935 the agreement is
very close.
The tables on pp. 147-150 also show the relationship between
the numbers employed and production in each industrial group.
For this purpose the average of the indices of production is
divided by the ratio of the numbers of operatives (or manual
workers).’" The result is headed index of efficiency. The index
shows an increase of 12 per cent in the six years. If, however,
the salaried (administrative, technical and clerical) class is
included in the divisors, the measurement of increase in eflSciency
is reduced to 5I per cent. The numbers in the salaried class
increased during the six years, while the numbers of ‘operatives’
diminished.
1930 AND 1935
The same process is adopted for analysing the change in
production firom 1930 to 1935; but, at the time of writing, the
Board of Trade’s account of the physical output is not complete
and where necessary use has been made of Dr Rhodes’s com-
putations (London and Cambridge Economic Service, Special
Memorandum No. 47).
Dr Rhodes’s work brings out the essential ambiguity of the
measurement; for, working on the most detailed statements of
quantity possible, he finds that the forward and backward
measurements (J/ and J2) differ perceptibly in many of the
hundred (or so) separate industries, markedly in the fourteen
industrial groups, and even more considerably when these
groups are aggregated. He weights by the net output of each
of the hundred industries.
In the accompanying Table A, J/ and J2' are as given by
Dr Rhodes. and ^^e computed by applying his indices
in each industry to the gross ouiput of that industry. The Board
of Trade gives Jg for each industry, and in computing J/, J^'
1 fS(PY) . SiP’Q') , S{p'^) . S{p'Q')\
I VWr ■ S{N) S{n) ■ SiN) f
.IM
• S(J^) ’
where «, N are the numbers employed in 1930 and 1924.
'X ABLE A
* Revision suggests:
Timber 114*0 113-4 114*0 ' 113*4
Total 124*0 124*1 115*5
%
Mote. Some of the entries for % J2' from those in Table IV, p. 150, since in the latter some modifications were made, which
are not'relevant to Mr Devons’ treatment.
THE CENSUS OF PRODUCTION 143
and Jj 5 it has been assumed that in detail the same factor may
be taken for each computation.^
I The following shows the working of the Industrial Group ‘Non-Ferrous
Metals’:
Board of Trade
Gross Output
Net Output
Given*
Computed
Given*
Computed
Pg Pih ?/?i
1930 1935
piP pPi
'
pw pi'ii 9' ill
1930 1935
Pi 9' P' 9 i'
Copper, brass
21‘0 21*3 0*69
14-7 30-4
5*8 7*0 0-69
4-8 8-4
Aluminium, lead
26-5 33-2 0-83
27-6 31-9
6-2 9*8 0-83
8-1 7-5
(iold, silver
8-1 31-2 0-34
i0'6 23*8
i-i i-o 0*34
0-3 3*2
Finished brass !
10-7 11-5 0-88
lO-I’* X2*2
5*7 6*8 0*88
6-0 6*4
Plate, jewellery
87 9-2 0-97
8*9 9*0
4-6 4*6 0*97
; 4*5 4*7
Watches, clocl^
0-9 1-4 0-35
0-5 2-6
; 0*5 0*7 0-35
0*2 x-4
£roxL.
75-9 107-8
1 72-4109*9
23*9 29*9
23-9 31-6
Ji =
^09-9 ,
75‘9 ”
1-45;
j loy-S
^2='z:^ = i*49;
/2*4
T/ 3^*^
=; 1.32;
' 23-9
T/^g 9 - 9 .
23*9 ’
1*25.
(In the tables, pp. 142, 147-150, these J’s are multiplied by 100.) Here it is
assumed that In each line this factor is used for the ‘computed’
entries.
Dr Rhodes
Net Output I Gross Output
Givenf
Computed
Civenf 1 Computed
Pi 9' P'9i
P9 Pi9i ! Pi9 P9i
Copper, etc- i
Aluminium, etc-
Gold, etc.
Finished brassf
Plate, etc.
Watches, etc.
5*8 6-9 1*45 0-69
6-2 9*8 1*21 0*88
I- 1 i-o 2‘08 0-47
5-7 6*6 (i- 43 )(o- 76 )
4*6 4*4 1*56 0*64
0*4 0*6 1-23 o*8i 1
4*8 8*4
8-6 7-5
0-5 2-2
(5-0) (8-1)
2*8 7*2
0*5 0-6
21-0. 19-7
26-5 33-1
8-1 30-7
'aJ
0*7 0*0
0*9 i-i
1 i 3'6 30’5
29*0 32-0
14*5 16*8
( 7 - 8 )(i 5 * 4 )
5*7 * 3*5
0-9 i*i
;^;mn.
23-9 29-3
22*2 34*0
75 - 9 104-7
71-5 109-3
/,= ™— 44^
22-2
75‘9
J's=^=*- 46-
7**5
* From Final Report.
•f From Preliminary Report.
X The figures in ( ) arc interpolated from the values of J i and computed
from the remainder. This is equivalent to Dr Rhodes’s method. He gives
no index for Finished brass.
the census of production
Jvir Devons, in working on the 1 93^^35 changes, adopts a
different hypothesis from that of Dr Rhodes, and a com-
parison of the two methods brings to light part of the essential
difficulty of any computation of the physical volume of pro-
duction.
Using now capitals for 193^ small letters for 19353
can express the data thus:
For each industry we are given F, F', v\ that is, the values
of the gross and net outputs at each date. For some com-
modities we are given separately but not P' that
is, we have the quantities and change in selling prices for part
of each industr>^ By using a rather rough assumption^ we can
separate the prices for the first part of the industry, for which
quantity data are available, so as to have this scheme :
Average Average
Value
Value
Qiiantity Quantity
price
price
Industr>'
1930
1935
1930
1935
1930
1935
ist part
V,
< 3 .
9 i
Pi
2nd part
V2
%
—
—
For the second part of the industry, 'we only have F2,
Fg', The ratio of the values, t;2/F2, is the product of the ratios
of the quantities (^2/62) prices (^2/^2)*
Dr Rhodes and Mr Devons both proceed on the assumption
that the results obtained for the first part of the industry are
applicable to the whole, but Dr Rhodes interprets this as
meaning that the ratio of quantity {qilQi) is applicable,
Mr Devons that the ratio of prices {pijPi) is applicable. Thus
Dr Rhodes uses
T ^'iXgl/Ql + ^^zXgl/Ql gl :i=
I Neither of the authors nor the Board of Trade make clear the method
by which Qj, qi^ Pj, are obtained from the details. The sequence
may be:
SvxP/p^SPq, ' p{^P^-Sv‘i‘SPq \ ^ .
or SVx PIP^SPQ, p^^P^^SpQ-^Sv]
or St}xQlq:=^SpQi \ where the quantity ratios are
or ^Fx^/a=6P^, qi-^Qi^SPq^SV } known.
It is only the ratios ^/P, qjQ that are needed, not the terms separately.
* qi/Qi Is already composite as shown in the previous footnote, and different
valu^ are generally used in the working of /g •
THE CENSUS OF PRODUCTION
145
while Mr Devons has , . ,
V 1l (r 4-^1
r Vl X gl/Ql + ^>2 X PlIPl * I ^'l/
' v, + v, - F, + F2 •
These would be equal if V2/V2 = Fj/yj , which is not usually the
case. The required measurement is
r _ X qilQi -f F2 X ^2/^2
F. + F^
and in the Board of Trade’s Reports some value is assigned in
each industry to pQ and therefore to q/Q^ but it is not clear
how the difficulty has been overcome.
The numerators of are added to obtain the numerator for
a group of industries, and also the denominators added.
The results of the different methods are shown in the accom-
panying Table A, p. 142. At the time of writing the Board of
Trade’s Report on four groups is not available, and Dr Rhodes’s
figures are given in italics in these cases and used for the com-
bination of all industries.
Mr Devons’s numbers agree nearly with those worked from
the Final Reports in the Iron and Steel, Engineering, Textiles,
Leather, Clothing and Food, etc. groups, but differ for Non-
ferrous Metals, Chemical Products and Miscellaneous. Dr
Rhodes’s numbers show for about half the groups considerable
dispersion between Jj and J2. In many cases the Jj',
computed for the Final Reports lie within or nearly within
Dr Rhodes’s margin, but not for Iron and Steel, Leather,
Food, etc., Chemical Products and Miscellaneous. Unless for
the Final Reports there was more quantitative information than
was at Dr Rhodes’s disposal, it may be held that information is
insufficient to give a precise measurement in these groups.
For a single measurement of the volume of production there
seems to be no better course than to average Jj and J2'
then have
J
J'
Devons
—
U9‘4
Rhodes
U9’4
119-8
Final Report
ii8-S
119-1
for all the Industrial Groups together, and this consistency
enables us to state an increase of a little less than 20 per cent in
the period 1930 to 1935 some confidence.
BKI
10
146 THE CENSUS OF PRODUCTION
The results of this investigation are set out in the accompanying
Tables I, II, III, IV. For all the industries together we have:
Index-numbers relating to Industrial Production
1924
1930
1935
1930
1935
Value: Gross Output
100
9t
95
100
104
Net Output
100
97
103
100
io6|
Volume: Gross Output
100
107
126J
100
118J
Net Output
100
108
129
100
Economic Service*
100
107
130
100
121
Price : Gross Output
100
85J
75
100
88i
Net Output
100
90
8oi i
100
Bgi
Materials
100
71
100
87
Operatives: Number
100
96
95
100
99
Eteiency: Operatives
100
112
100
120
Operatives and
100
to
0
126
100
119^
administratives
For this table the averages of the values Ji, J2} etc. are used.
* Excluding Agriculture.
As regards prices, the fall in wholesale prices of materials
according to the Board of Trade was 37I per cent from 1924
to 1934 and to 1935, by The Statist^ 42 per cent to 1934, 39-I per
cent to 1935, and for imports of materials, roughly estimated,
56 per cent, as compared with 29 per cent in this table.
The tables relate necessarily only to firms employing more
than ten persons.
The gross and net values exclude excise and the sugar subsidy,
but include implicitly the building subsidy. For the index-
numbers of volume, price and efficiency the exclusion or
inclusion only affects the system of weighting the average, but
it is well to make a rough estimate of the change when we add
excise and subtract subsidies ^ thus using as weights more
definitely the ‘value added by manufacture ^
Food, drink, tobacco
Building and materials
Total
Food, drink, tobacco
Buildiiig and materials
Total
Net Output (adjusted)
1924 to 1930
HJ1+J2)
iih'+h')
Efficiency
107
88J
102
125
90
1 16
108 ,
89^
112
1930 to 1935
IW+V)
Efficiency
92
102
I2l|
121
• itB
89
120
I The building subsidy is roughly estimated at xm. in each Census year,
that is ;£’joo for each of 60,000 houses.
Table I
Censuses of Productioti, 1924 and 1930
Gross Output
^ mr^O'sDOO iMwcrsc co
i, j CTico 'O cyioo cd co o', c. a: 5 c
D O^COC CO
IT^CO CO r>- CO 05 O50D r-
I ciccuO'-''-'Cr5C5r^T5-<-H»->coco «
i CO coco coco CO CO CO 05 coco CT 5
coco 0'-*0a5l>*'!t*>i»-(CiC0 CM
CO coco CO COCO 00 cooxoco co
cococo O ^ CO coco t>^COCO 05^ co
05 •-* coco a50*-'0^cief»-<05
r-' a5C0 o t}« o co rv co o
05 C003 O5»-««O*^C<<M*-«05 <M
^ CO O)-- -^oiD tnr^cFi co
^ j ^ tOOD C?5 0 O^*-* ^ ^ 05^5 O
00»-*C0ClCOOClC(t^ OiiO ci <o
coco o CO coco CO CO rococo cnco o
t-Mio ct »-* CO
iOCfCICOCMCO'^^IMC5CM’<«J«CO CO
C75 O 05^ xi^co 10 05<0 m CO O 00
ci i -«<0 Of or <M
... g
-^1
g>
CO O' S
—
I .SP
?i. ^
«Ig
1 « g s
§‘i>§s
o
h
JO 5
to
♦J* ^ d
^ 2- rf
M 5S tJ
is g’-SJ %
■ 53-0 i s-fi
go §*.§
^ erj -3 W
"B g
B'Ss g
=3l§-B|
Cd 22.3*^ S
PQi^SphO
10-3
Table III
Censuses of Production, 1930 and 1935
Gross Output
Cf'sO or OtCiO tTJCO i
0^00 O CsCO COGOf^DDCOCC OCVj
oco^ coco CO cr »nco?£> cotri
O O Oi 0^00 CO CO J>CO O CC ^ CO
r^cnjT^r^r^cocn*-* otco oco mco
cn o^co CO c:>t^cococo osco
0
: CU
s«
TJ
<U
W Cl
; g
0 -{-J
g-
X
,0
-§ S
m
•0 «
CO
^ S4
o>
)— ( cr*
coinmast^'rj^o m -^1^00 t^co co co
o o Gi cfico cn cs^ i>oo Cico cnco
^or o ^coco coco co<D coo or
O incOCT 5 « •-• ^ CO*-« O ^ <X)OI
or CO CO oi ►
^ rococo CO CO 1
d I-. Old c< '
coco or co'*0 CiO t^or o or cftcoco O
►^0^000^00000 Oico o
i2 eC [ O OCOCO C5W «CDCO Of j O
1 S ^ CO a> o Th CO t ^«3 OKO CO i> mo o co 1 <-
' w cr '-•CO *"•»-' or cn m
CO *-> <0 coco •-* o> o mo or co o
coco CO coco moo 0500 co or 1
or *-*co *“«»-• Of •-•Of f
.§^3 s §
sli .
151
■§§ i
; *■
ll'l !•'
mi\
o
w
coo ino^O’^*-‘CC''?h»^r>co in
0 ( Cf coco i-iO'-^CO*-'ClO'^ Cl
f%. coo o^o’^'^coo^o^co nco
I CO CM O CO -^CO *-1 Cl Cl
!o
r^* CO too o 0^0 o G) '?hco
rjH -I o CO ^CO CO Cl Cl CO M
•ci^co CO '^co'-*co>-' 0 >-<co
N i CM o oco oo i>«'«j^rh'00 *-• in o
I o X^CO r«-OCO GiO X^COJ>»COCO CO
V CO d CO •-* o x^co o o •-< CM •-< m o
kT O O OiCO OCOCDOr^O^OCOO) Gi
Icox^iocicoaioinocoococi co
I *-*OCOCOCO*-'*-'«Ti^wi-Ki- 4 CO
_ in w o x^oo OdiO'CO’^cieico co
kT d'<^T}<COCOd^>-<T}<»HCO>-*CO d
; CO in X^ T^CO d O CO d CO o
I dOdOOOOdOOO oco o
m
QN v *-* CO in ••
•-< dCO O d O -^o O d
CO o CO «-< co coco d
CO <?!i dco'^jo-ocox^dco'-'ocoini-^co
CO CO d d t^co x^ococo'^inx^'-' j
>_, Cl t_l ►-« »-l l-l »-« M
j’s a
3 8 s 8
si’i s g
bp a
■M y 53 w
li ^
O ^ 1-C! ^ S ;
o o aS^.S.S"
OfScfSPniSf
THE CENSUS OF PRODUCTION I5I
4 . INDEX OF PRODUCTION, 1924 TO 1938
ANNUAL MOVEMENT 1924 TO 1938
The published data for annual measurements of production
are the Board of Trade index, the London and Cambridge
Economic Service index, and the index-numbers suggested by
Mr Stone. These have to be collated with the more complete
accounts at the Census dates. A supplementary measurement
is obtained from the numbers of persons employed in the
Industrial Groups covered.
The Board of Trade index did not include building (prior
to 1934)5 clothing (other than boots) nor Local and Central
Government activities nor Public Utilities (other than gas and
electricity); in consequence it showed a much lower increase
than those in the tables above, and is not suitable for inter-
polation for the aggregate. The Economic Service index agrees
very closely with the Censuses, but the intercensal movements
show only an intermittent parallelism with the movement of
employment, and need reconsideration as in later paragraphs
especially for the years 1936, 1937 and 1938.
Mr and Mrs Stone virtually reject the Economic Service index
and construct indices based on the Censuses, the results of
Import Duties Acts enquiries and the volume of employment
{Economic Journal, 1939, pp. 476 seq.). In the end they adopt
a formula:
Output = a 4 - 5 X Employment ^cxT,
where T is the number of years measured for a base year. The
values of a, b, c are obtained by the method of least squares
from five given index-numbers, viz. Censuses at 1924, 1930 and
1935 and the Import Duties results for 1933 and 1934. The last
named are difficult to bring into line with the others, and in any
case do not cover the whole field.
There can be little doubt that in times of busy trade pro-
duction increases more rapidly than the number of insured
persons not tmemployed at particular dates, owing to more
overtime and less part time, while the reverse is true in times
of depression, and ifi particular years other circumstances affect
the relationship. The measurements of efficiency given in the
tables (pp. 148, 1 50) show that there was a more rapid increase in
the five years 1930-35 than in the previous six years 1924-30;
1930 was a year of increasing depression, 1924 and 1935 yean
of moderately good trade. We are not justified in assuming, as
Xg2 THE CENSUS OF PRODUCTION
in Mr Stone’s formula, that the increase in efficiency (indicated
by the coefficient of T) was uniform throughout the whole
period (1924-38) that he takes, and in particular we cannot
assume that the same relationship holds in the years 19363 i937
and 1938-
The connection between employment and production can be
best examined by supposing a uniform increase from 1924 to
1930 and another uniform increase from 1930 to 1935. Thus in
the period 1924 to 1930 the formula used is
Output - Employment — ci,
where ^ = 0 at 1930, and output is taken at 93*5 (as in C) in 1924,
so that ^=1(104*6 - 93*5) == 1*85. In the first period i *85 is sub-
tracted cumulatively each year from the Employment index,
column H, in the annexed table— thus 1 1 • i is subtracted in 1 924,
9-3 in 1925, and so on. In the second period 3*84 is added each
year cumulatively, so as to obtain the same numbers in 1935-
The resulting numbers are shown in the last column of the table.
Index-numbers of Production and Employment
Volume of Production
.
Board of
Trade
A B
Economic
Service
C D
Census of
Production
E F
Mr
Stone
G
Insured
workers
H
G com-
bined
with H
1924
97*0
—
93*5
94*4
92*5
94
93-8
104*6
93*5
1925
—
—
93-9
—
—
—
102*4
93*1
1926
—
—
§2-0
8o-8
—
—
—
99*5
92-1
1927
103-5
—
104-4
102-8
—
—
103*3
107-3
101*7
1928
103-0
—
101*3
—
—
103-9
104*1
100*4
^929
io8*4
t '
109-1
io8-8
—
—
1 10-2
107*1
105*3
1930
1 00-0 •
1 00-0
1 00-0
100
100
101-7
lOO-O
100*0
1931
90-5
—
90-5
89-4
—
—
92*3
92*3
96*1
1932
90-1
— - *
90*9
90*0
—
—
94*5
90-1
97-8
1933
95*3
—
99*7
98-2
—
—
102*4
95*1
io6-6
1934
107-2
Io6-2
113-2
110*6 i
—
—
112-3
100*2
115-6
1935
—
^ 3*4
121-3
119*0 ^
120
ii8*i
102*1
121*3
1936
— .
124-4 :
132-0
129*5 i
—
129*4 1
ro8-i
1937
—
132-8
139-0
13^*9
—
—
142-2
115*7
142-6
^938
—
124-2
125*5
122-9
—
j
140-5
1 1 2-0
142-7
A, D and F exclude Bi 41 ding. '
B, G and E include Biding.
G excludes Building, Public Utilities and Government Departments,
The Board of Trade index is taken from the Ministny of Labour
Gazette^ in which the most recent revisions are included. The
index is given separately for each quarter of the ye^r; and these
THE CENSUS OF PRODUCTION
^53
entries are averaged for the year. The earlier numbers have been
adjusted proportionately so as to give ioo*o in 1930.
The Economic Service numbers are computed from the
London and Cambridge Economic Service Bulletin^ May 1939. Agri-
culture has been excluded.
Mr Stone’s numbers are from the Economic Journal^ September
1939, p. 477^ column (5). The insured workers employed axe
obtained by excluding the Industrial Groups Transport, Dis-
tribution, Commerce and Miscellaneous Trades and Services,
and then subtracting the numbers imemployed in June from the
estimated number insured in July. The resulting numbers are
expressed as percentages of the* number in 1930.
The last column is as explained above. When these are com-
pared with the Economic Service index (column C) it is seen
that the employment index under-estimates the fall in 1926 (the
year of the coal stoppage) and the rise in 1927 when arrears were
made up. Similarly it rises less in 1929 and falls less in 1931, the
worst year of the depression. These are precisely the relationships
that we should expect. But in 1937 the employment index rises
more rapidly than we should expect and does not fall in 1938.
Since the Board of Trade index (column B) shows a smaller fall
than does that of the Economic Service, the index-numbers for
1937 and 1938 must remain rather uncertain. It may be noticed
that the changes in columns B and C are nearly equal for the
whole period 1930-38, and also for the sub-period 1934-37-
Reviewing all the evidence, we conclude that the Economic
Service index is the most consistent, and that in default of any
conclusive evidence to the contraiy may be used as a fairly
adequate measurement for the field of industrial and mineral
production that it covers. It cannot claim any great precision,
and it has been shown on pp. 136-141 above that there are
inseparable inherent difficulties in defining and measuring
physical production, even if we had complete data.^
NOTE ON WEEKLT WAGES AND ANNUAL
EARNINGS
Information about wages comes from three source. The
Ministry of Labour collects from* time to time statements from
employeis of the numbers of wage-earners employed and the
I Cf. Joitrml of the Royal Statistical Society, 1939^ PP- 6 seq. AU the numters
in the table above are weighted by vines in the base year, that is, they
are based more or less directly on the formula named in this chapter.
154 THE CENSUS OF PRODUCTION
total payments made to them in a selected week. No distinction
is made between occupations within the factory. The results
are assembled for each of several scores of industries, with detail
that has varied from enquiry to enquiry, such as division by
sex, distinction between large and small firms, amount of time
lost and overtime, hours of work. The returns are not com-
pulsory, and the proportion of the numbers returned to those
in the industry as a whole varies considerably between the
industries. To obtain a general result problems of weighting
occur, but the various methods tried for averaging result in
very nearly the same figures, and it is not necessary to describe
them in detail. It is, of course, possible that the returns are
biased, since firms paying low rates may be less willing than
others to report, but it is believed that this influence, if it exists,
has negligible effects.
The Ministry of Labour also publishes each month all known
changes in wage rates, but has not for many years shown details
of the numbers affected, only giving the total numbers for large
industrial groups. Each January there is a summary account
of changes, and in recent years an estimate of the total effect
on wages has occasionally been given. Such data lead to the
index-numbers of change of wage rates used in our main
computation, pp. 6o-~66. In computing the movement of total
earnings by the use of these index-numbers, naturally care is
taken to give full effect to changes not only of the numbers
^occupied’, or registered for insurance purposes, in each
industry, but also to the numbers unemployed, wholly or
temporarily; and some check is also possible from scattered
statements of part-time work, and by the relation of hours
worked to normal hours in some of the Wage Census Reports.
But among those fully employed, especially on piece-work,
there is variation firom time to time between the relation of a
week’s earnings to standard rates, earnings increasing in times
of industrial activity. In spite of all these uncertainties, it has
been found that the changes in average earnings in the periods
1924 to 1931 and 1931 to 1935, as shown by the general returns
of average earnings at those dates, are almost exactly the same
as those already shown by the index-numbers of rates.^ It is
improbable that this relation changed much in intermediate
years.
I See Wages and Inmme in ike United Kingdom since i860, Appendices A and C,
for further discussion of the Census statistics.
THE CENSUS OF PRODUCTION I55
The third source of information is found in the Final Reports
of the Censuses of Production of 1924 and 1930. (Unfortunately
that for 1935 is not available.) Here we have statements of the
totals paid in wages by about two-thirds of the firms (employing
more than ten persons) that are included in the Censuses.
Also we have recorded the numbers employed by these firms
in one week in 19243 and in the middle week of each month
in 1930.
One would expect that factories were at work for 50 weeks in
the year, allowing two weeks for public and trade holidays, and
consequently that average weekly earnings would be obtained
by dividing total wages by the average number of operatives,
and the quotient by 50. The annexed table, how^ever, shows
that when we divide average annual earnings thus computed
for 1924 and 1930 by average weekly earnings as computed
from the wage returns in 1924 and those of 1931 adjusted to
1930, we find 51 and 51 - 7 for the main group of Factory Trades.
The figures for coal-mining depend on difficult estimates of the
number of shifts worked, while agreement is not to be expected
for building, since the figures are confused by the existence of
many small firms which are not included in this extract from
the Census Reports.
Census of Production. Great Britain
}
Factor)’^ trades
Building and
contracting
Coal-mines
1
Total wages ;
Average number of j
operatives (ooo’s) !
A. Wages per head j
per annum, £ !
1924 ! 1930
494 , 490
4,219 4,171
117*1 117*5
i 1
1 *924 ; 1930
‘ 59 ' 64
, 379 i 4 ”
156 ■ 158
1924
162
i>i 75
138
mo
104
915
1 14
JVage Returns.
United Kingdom
1
! Oct.
*924 ; iggi
! ■«
Per shift
Weekly earnings j
45y, lid. 445. 6(/.
!
1
j 60s. i 58^. $d.
[ 1
io-65f. ! 9-29^.
Shifts per annum
B, Average 1930* |
A-^-B. No. of !
weeks or shifts ;
— ! 45 ^.
51 51*8
j — i 59 ^-
! 52 . 53
i
260
245
Deduced from October 1931 by applying index-numbers of wage rates-
J^g the census of production
No complete explanation has been found for tWs discrepancy.
The exclusion of Northern Ireland from the Census statistics
cannot make any significant difference. Possibly, since October
iqqi was in a period of severe unemployment, the percent^e
of insured persons unemployed being 21-6, while the average for
logo was 15-8, average earnings in 1931 were lowered by shwt
time (not counted as unemployment) more than in 1930. Or
the explanation may lie in the different methods of sampling
and recording, and the number of approximations in the
computations, each of trifling uncertainty but possibly accu-
mulating in one direction. After all, the difference in the mam
average, 51-7 weeks, and the expected, 50, is less than 4 per cent.
In computing the Total Wage Bill we have to choose between
these estimates. As explained on p. 58, our basis is the number
of occupied persons recorded. in the Population Census as
occupied and not out of work in 1931, since the Census of
Production does not cover the whole ground. We have assumed
that the average number of weeks actually worked by those who
described themselves as following an occupation and not out
of work was 48, allowing two weeks for holidays and two weeks
for absence through sickness or other causes. This 48 is then to
be multiplied by average weekly earnings. After weighing all
known factors, it is thought that the average computed from
the October 1931 wage returns is more appropriate for the
basis of the total and change of the National Wage Bill, than the
slightly higher figure suggested by the Census of Production.
Thus the principal table on p. 81 gives the number of
wage-earners occupied as computed from the Population
Census, average earnings as computed from the wage returns
of October 1931, supplemented by other information, and for
annual earnings the product of these averages by the number
of persons and 48, the number of weeks worked on the average
in the year.
This question is discussed also on pp. 69, 72, 73 and 74 above.
Appendices to Chapter III
APPENDIX I
SOURCES OF STATISTICS IN PART 1
In tMs Appendix explanations are given of the statistics in
Part jfhrther details of classification and such other matters
as may be useful for reference. No attempt is made to cover
the whole of the ground of the Censuses of Production.
The main Industrial Groups in the table on p. 126 are
obtained by separating Coal from other Mines and Quarries,
giving Food and Drink separately from Tobacco, isolating
Rubber firom Miscellaneous Trades, and dividing Public Utility
Services and Government Departments into four groups. On
the other hand the Census Groups ‘ Clay and Building Materials ’
and ^Building and Contracting’ are merged. Building by
oifficial bodies is, however, kept (as in the Census) in the
Government groups. The small unclassified item for Northern
Ireland is divided equally between Drink and Tobacco. The
numbering consequently differs jfrom that used by the Census.
The divisions follow fairly closely those used by the Ministry
of Labour,
The sub-groups treated separately in the detailed Census
Reports are as follows:
I, Coal Mining.
IL Other Mines and Quarries include:
(1) Metalliferous Mines and Quarries.
(2) Non-MetalHferous Mines and Quarries (including Oil
Shale Mines).
(3) Slate Mines and Quarries.
(4) Salt Mines, Brine Pits and Salt Works.
III. Clay, Building Materials and Building:
(1) Brick and Fireclay,
(2) China and Earthenware.
(3) Glass.
(4) Cement.
(5) Building Materials.
(6) Building and Contracting.
158 APPENDIX I. SOURCES OF STATISTICS IN PART I
IV. Chemicais, Paints, Oils, etc. :
(1) Chemicals, Dyestuffs and Drugs.
(2) Paint, Colour and Varnish.
(3) Seed Crushing.
(4) Oil and Tallow.
(5) Fertilizer, Glue, Sheep Dip and Disinfectant.
(6) Soap, Candle and Perfumery^
(7) Starch and Polishes.
(8) The Metal Trade. ^
(9) Ink, Gum and Sealing-Wax.
(10) Petroleum.
(11) Explosives and Fireworks.
V. Iron and Steel:
(1) Pig Iron and Ferro-alloys (Blast Furnaces).
(2) Smelting and Roiling.
(3) Foundries.
(4) Tinplate.
(5) Hardware, Hollow Ware, Metal Furniture and Sheet.
(6) Chain, Nail, Screw.
(7) Light Castings in the 1924 Census (which in later
Censuses were included in Foundries).
(8) Wrought Iron and Steel Tubes.
(9) Wire Trade.
(ro) Tools and Implements.
(11) Cutlery.
(12) Blacksmithing in the 1924 Census (which in later
Censuses was included in other groups) .
(13) Needle, Pin and Metal Smallwares.
(14) Small Arms (private firms).
VI. Engineering, Shipbuilding, and Vehicles:
(1) Mechanical Engineering.
(2) Electrical Engineering.
(3) Shipbuilding (private firms).
(4) Motor Vehicles and Cycles (Manufacturing).
(5) Motor Vehicles and Cycles (Repairing).
(6) Aircraft.
(7) Railway Carriage and Wagon Building.
(8) Carriage, Cart, Wagon.
VII. Non-Ferrous Metals, Jewellery, Watch and Clock:
(1) Copper and Brziss (Smelting, Rolling, etc.).
(2) Aluminium, Lead, Tin, etc. (Smelting, Rolling, etc,).
(3) Gold and Silver Refining.
(4) Finished Brass.
(5) Plate and Jewellery.
(6) W^tch and dock
APPENDIX I. SOURCES OF STATISTICS IN PART I I59
VIIL Textiles:
(1) Cotton Spinning and Doubling,
(2) Cotton Weaving.
(3) Woollen and Worsted,
(4) Silk and Artificial Silk.
(5) Linen and Hemp.
(6) Jute.
(7) Hosiery.
(8) Furnisfiing (Bleaching and Dyeing).
(9) Lace.
(10) Rope^ Twine and Net.
(11) Canvas Goods and Sack.
(12) Asbestos Goods and Engine and Boiler Packing.
(13) Flock and Rag.
(14) Elastic Webbing.
(15) Coir Fibre, Horsehair, Feather.
{16) Roofing Felt.
(17) Packing.
IX. Leather:
(1) Fellmongery.
(2) Leather (Tanning and Dressing).
(3) Leather Goods.
X. Clothing:
(r) Tailoring and Millinery.
(2) ^tificiai Flower in the 1924 Census, which in later
Censuses was included in Tailoring.
(3) Boot and Shoe.
(4) Hat and Gap.
(5) Glove.
(6) Fur.
(7) Umbrella.
XL Food:
(1) Grain Milling.
(2) Bread, Cakes, etc.
(3) Biscuit.
(4) Cocoa and Sugar Confectionery.
(5) Preserved Foods.
(6) Bacon Curing and Sausage.
(7) Butter, Cheese, Condensed Milk and Margarine.
(8) Sugar and Glucose.
(9) Fish Curing.
(10) Cattle, Dog and Poultry Foods.
(11) Ice.
XII. Drink:
(1) Brewing and Malting.
(2) Spirit Distilling.
(3) Spirit Rectifying, Compounding and Methylating.
(4) Aerated Water, Cider, Vinegar and British Wines.
(5) Wholesale Bottling.
l60 APPENDIX 1. SOURCES OF STATISTICS IN PART I
XIII. Tobacco.
XIV. Timber:
(1) Sawmilling, etc._
(2) Furniture and Upholstery. , 1 *
(3) Cane and Wicker Furmture and Basketware.
(4) Crates, Cases, Boxes.
{5) Coopering.
XV. Paper, Printing, Stationery:
(1) Paper.
(2) Wallpaper.
{3) Stationery.
(4) Cardboard Boxes. _
(I) Printing, Binding, Stereotyping, Engraving. ^
(6) Typefounding and Electrotyping m the 1924 Cemus,
which in later Censuses was included in Pnnting>
'(7) PrSS^°and^PubUcation of Newspapers and Periodicals.
(8) Pens, Pencils, Artists’ Materials.
XVI. Rubber.
XVII. Miscellaneous:
(1) Scientific Instruments.
(2) Fancy Articles.
(3) Coke and By-products.
(4) Manufactured Fuel.
(5) Linoleum and Oilcloth.
(6) Musical Instruments.
(7) Brush.
(8) Gaines and Toys,
(9) Sport Requisites,
(10) Manufactured Abrasives,
(11) Incandescent Mantles.
(12) Cinema Film Printing.
XVIIL Gas, Electricity, Water;
(1) Gas.
(2) Electricity*
(3) Water.
XIX, Transport and Gonnnxmication (Engineering and Construc-
tion) :
(i) Railway Companies.
{2) Tramways and light Railways,
(3) C^ai, Dock and Harbour.
XX, Local Authorities (Construction, etc,}.
APPENDIX L SOURCES OF STATISTICS IN PART I l6l
XXL Government Departments (Production, not Civil Service or
Transport) :
(1) Admiralty.
(2) General Post Office.
(3) War Office.
(4) Air Ministry.
(5) Other Gk)vernment Departments.
XXII. Laundry, Cleaning and Dyeing.
Net output of the Laundry, Cleaning and Dyeing Group
which is available only for the year 1 024 is treated separately as
Group XXII.
Regrouping of the Sub-Groups as between the various
Trade Groups [Inter-group shifts)
In order to make the returns of the Trade Groups comparable
through all the Censuses of Production we had to make a certain
amount of re-allocation of the various Sub-Groups. This applies
especially to the 1924 Census, the subject-matter of which was
arranged differently from the later Censuses. Thus, Trade Group I
(Coal Mining) included in the 1924 Census the net output of the
Manufactured Fuel Trade, valued £0-4, mn., which in our table
is classed with Trade Group XVII (Miscellaneous), following
the practice of later Censuses.
Trade Group III in the 1924 Census included the net output
valued ;;(^o-6 mn. of Manufactured Abrasives (shifted to Miscel-
laneous, Group XVII) ; mn. of Asbestos Goods and Engine
and Boiler Packing, which in our table is classified together with
Trade Group VIII (Textiles); ^^0*4 mn. of Roofing Felt has
been alternatively tabulated with Textiles (Trade Group VIII),
though we left it in the total of Trade Group III.
Trade Group IV (Chemicals) included in the 1924 Census a net
output of I mn. of Coke and By-products which in our table
is presented together with the Miscellaneous Trades (XVII).
Trade Group VI (Engineering) in the 1924 Census did not
include the net output of ^^3-2 mn. of the Carriage, Cart and
Wagon Trade which was classed together with the Timber
Group.
Trade Group VIII in the 1924 Census included £0*2 mn. of
Incandescent Mantles classed together with Linen and Hemp,
though in the later Censuses that sub-group w^as separated and
treated together wdth the Miscellaneous Trades. In our
Table B, p. 126, we left them as in the 1924 Census in the Trade
II
BNI
i62 appendix I. SOURCES OF STATISTICS IN PART I
Group VIII, though perhaps it would be better to put them
wth the Miscellaneous Group XVII. The item is very small.
The net output of mn. in 1924 Canvas Goods, Sacks,
etc. Trade is included in Trade Group VIII, though in the
1924 Census it is presented together with the Leather and
Rubber (Trade Group IX).
The whole Trade Group IX, viz. Leather Trades, in the
1924 Census is lumped together with the net output of 1 1 -8 mn.
of our Trade Group XVI (Rubber), and in addition includes
;^i-9 mn. of the Canvas Goods and Sack Trade belonging in
our table to Trade Group VIII.
Trade Group X (Clothing) in the 1924 Census includes
,fi6-3|-mn. of net output of Laundry, Cleaning and Dyeing
which in our table is relegated to a separate Group XXII in
order to make the Group X comparable with the Censuses of
later years.
In the 1924 Census Trade Group XIV (Woodworking) included
the net output valued at ;^i-8mn. of Brush-making Trade
relegated in our table to Trade Group XVII (Miscellaneous).
Trade Group XV (Paper, Printing, etc.) includes the net
output valued at ;^f3 nm. of Pens, Pencils, Artists’ Materials
Trades which in the 1924 Census was presented together with
Trade Group XVII (Mscellaneous Trades).
Other minor changes had to be made, but they do not affect
the unit million figure.
Sources of Information
At the moment of writing this commentary (January 1941)
three parts of the Final Report of the Fifth Census of Production
have been published. As each of the Censuses of Production
gives comparative data for some of the previous Census years,
and as it was found that the entries of net output for the same
year of the same trade group and trade sub-groups differ, in
some cases even considerably, we decided to give comparable
information taken from the three Censuses of Production
(table, p. 164). Thus for the year 1924 we have drawn our
information (fct in column A) fi-om the 1924 Census; in the
next column (B), from the 1930 Census.
For the Census year 1930 our information has been drawn
from two sources: the Final Reports of the 1930 Census, and
the Preliminary Reports of the 1935 Census, or for those Trade
Groups which are available from the first three published
APPENDIX I. SOURCES OF STATISTICS IN PART I l6$
volumes of the Final Report of the 1935 Census. We use the
same procedure adopted for arriving at the 1930 total on the
basis of the Final Census of Production, 1935, which we suggested
for the year 1924 in respect of information derived from the
same Census. The figures are given to the nearest million £,
If they had been to ;^i 00,000, more discrepancies would have
come to light.
In the case of the net output figures for the Census year 1935
we have been using two sources of information, viz. the Pre-
liminary Reports of the 1935 Census and the Final Reports of
the 1935 Census (column D) for all those trade groups for which
information has been already published. In the summary
table, pp. 127-8, columns B are used for 1924 and 1930 and
column D for 1935.
The differences between A and B under 1924 are, apart from
changes of classification already named, due to the inclusion of
firms with not more than ten employees. For 1935 the entries
under D are greater in some cases than those under C owing
to the inclusion of additional returns. It may be expected that
some further additions will be made in the Final Reports on
the industries for which only the Preliminary Reports are
available.
There are other details which affect comparability to a slight
extent.
The maintenance, construction and repairs of the London
buses are included in Motor and Cycles (Repairs) in the years
1924 and 1930; but in 1935 the same item (now the London
Passenger Transport Board) has been transferred to the Local
Authorities, Group XX.
The following classes of business were not included in the
1930 and 1935 Censuses: Taxidermy Work; Wig-making; Flax
Scutching; Portrait or Trade Photography, other than making
of or printing from blocks or metal plates prepared by photo-
graphic processes, and the printing of cinematographic films;
work done by employees of Parish Councils and Parish Meetings
and by inmates of Poor Law Institutions.
Army clothing factory (closed in 193^)5 Army bakeries and
Ordnance electricity undertakings are included in Trade
Group XXI (Government Departments).
In some cases the net output figures are returned Cosf
basis, i.e. they exclude profits, though the ^appropriate esta-
blishment charges’ have been duly met. Thus they are entered
1 1-2
164 APPENDIX I. SOURCES OF STATISTICS IN PART I
Net Output as reported in the Main Tables in 191245 1930, 1935
A. From the 19124 Census.
B. From the 1930 Census.
C. From the Preliminary Reports of the 1935 Census.
D. From the Final Reports of the 1935 Census.
Industrial
' 1924
1 1930
)35
group
A
1 B
B
; CorD
G
1 D
I. Coal Mining
210
210
' X39
121
1 *
II. Other mines
17
J7
! ^7
15
III. Building and
materials
1 42
124
m
139
140
*
i
1
IV, Chemicals
: 69
66
73
73
87
88
V. Iron and steel
no
99
92
92
115
1 17
VI. Engineering,
202
198
230
229
241
249
ships, vehicles
VII. Non-ferrous
26
25
24
24
29
30
metals
VIII. Textiles
223
222
147
148
156
^57
IX. Leather
13
12
10
10
10
1 1
X. Clothing
S9
76
78
78
77
81
XI. Food
99
85
92 ;
92
104
107
XII. Drink
1 64
83 j
64
1 65
65 1
i 87
XIII. Tobacco
i ^5
25 ;
31
1 31
28
XIV. Timber '
33
27
32
32
32 1
*
XV. Paper, printing 1
98
94
103
1 103
no
♦
XVI. Rubber
XVIL Miscellaneous
! j
i 29 I
12
30
14
28
1 14
28
14
29
*9
XVI 11. Gas, electricity.
73
69
95
93
no
water
XIX. Transport
! 45
45
41
41
38
XX. Local
Authorities j
32
32
37
37
33
*
XXL Government j
Departments |
20
20 1
19
^9
22
i
♦
Total
XXII. Dyeing, clean-
ing, etc.
Duties included
in 1924 total
1,632
16
95
1.549
!
L505
*
L5O4
*
1.576
*
i.599t
*
L743
1 i
!
i
* Not available. I Total, using Column C where necessary.
at a sum calculated to cover the cost of labour and materials,
with such a proportion of the general establishment charges ' as
was attributable to the services concerned ; the element of profit
is, therefore, absent from the value both of the gross and of the
net output. This method of calculating net output applies to
Transport and Communication, Trade Group XIX, to the
APPENDIX I. SOURCES OF STATISTICS IN PART I 165
Local Authorities, Group XX, and to the Government Depart-
ments, Trade Group XXL As regards Gas, Electricity and
Water, Trade Group XVIII, the position was as follows: the
net output value was obtained for the most part on the basis
of the selling value of the gas and electricity supplied and
included the profits derived from their sale; as regards water
undertakings, the revenues of which are frequently obtained
by the levy of a rate on the annual value of the premises served,
the receipts may not bear any necessarily fixed relation to
working costs.
Certain classes of maintenance belonging to the Local Au-
thorities Trade Group, such as street cleaning and watering;
house refuse, sewage, etc., are not considered as production
and are excluded.
APPENDIX II
EXCISE, CUSTOMS AND SUBSIDIES
The problem of including in or excluding from the net output
figures such items as subsidies, excise duties and customs duties
is not a clear-cut one, and it depends to a large extent on the
problem in hand. The accompanying table summarizes the
situation in respect of these items. It presents them in a form
which is handy and which can easily be fitted into the main totals
or trade-group totals obtained from the Censuses of Production.
The arrangement of the table is such as to bring it in as close
correspondence as possible with the table on pp. 124-5.
trade groups in which subsidies, excise or customs duties occur
bear the same numbers as in that table.
The information is drawn from two sources, viz, from the
Censuses of Production and from the Finance Accounts of the
United Kingdom. On the whole there is here a close agreement
betw^een the same facts as recorded in the different Censuses of
Production. Where such divergences exist, they are shown.
The entries in the table refer to the three Census years, 1924,
1930 and 1935, and are derived from the Censuses of Production
estimates. The data from the Finance Accounts cover the two
financial years ended on 31 March of the year of each Census
and a similar period ended on the same day the year immediately
following.
All entries in the table can be classed under one of three
distinct headings: subsidies, excise duties and customs duties.
l66 APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES
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;< g, I
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I i
w o -^co cjo a>cp
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6 6 6 6^6 6 6 6
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.s ^ o '§ s? 'C *y
'gPQ §P
1 .S a
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APPENDIX II. EXCISE^ CUSTOMS AND INDUSTRIES 167
tn m
coco o
CO CO
CO C: C e.CO CO I
Ci CTJ *-< CO lO CO o( •
Jsss! e
CO IT) CO
b ^ bi
to
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l68 APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES
The subsidies which occur in the table are in respect of the Coal
Mining Industry, the Sugar, Glucose and Molasses Trade, and
payments to the Road Fund (under lo and ii Geo. V, c. 72,
sec. 2; 16 and 17 Geo. V, c. 22, sec. 42; 19 Geo. V, c. 17, sec, 87;
19 and 20 Geo. V, c. 25, sec. 54; and 24 and 25 Geo. V, c. 52),
on account of the net proceeds of Motor Vehicle Duties, etc.
The subsidies to the Coal Mining Industry and the payments
to the Road Fund do not appear in the Censuses of Production,
while the subsidies on home-grown beet sugar do not appear in
the Finance Accounts of the United Kingdom.
We present the Road Fund payment together with Trade
Group XX (Local Authorities) . This is the sum of payments to
the Road Fund on account of the net proceeds of Motor Vehicle
Duties. The reason for doing this is that, though a large part of
the road and highway construction is carried out by private
contractors, the subsidy as such was not available to the Building
and Contracting Trades for distribution in the form of wages,
rents, rates, interest, salaries, etc. It did not add any additional
funds to the industry beyond their gross receipts expressed in the
contracted competitive prices. The issue is different in the case
of Local Authorities, which from this point of view act in the
double capacity of agencies ordering the construction and re-
pairing of roads and highways as well as of contractors building
them in their own administration. In this latter capacity they
act as their own contractors. It is clear that this method of
classifying the Road Fund grants is not a watertight one, if only
for the reason that a considerable proportion of constructional
work, repairs and renewals of highways, bridges, etc. is carried
out by private contractors. Allocating, however, a part of the
Road subsidy to private Building and Contracting, or leaving it
completely out of account, would probably be open to even
graver objections. A similar problem arises with the subsidy on
building.
In 1924 there was no subsidy paid to beet-sugar manufac-
turers. The subsidy was instituted in 1925 under the British
Sugar (Subsidy) Act. Both in 1930 and in 1935 the subsidy
exceeded the net output of firms to which it was paid and which
were mainly engaged in beet-sugar production.
In the Finance Act 1924-5 and in 1930 and 1935 there was
no subsidy in force in the Coal Mining Industry. In the Finance
Accounts 1923-4 the ‘'total issue in the year’ under the heading
Goal Mines Deficiency was ^{^i, 309, 603 and no issues were made
APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES 169
for the Coal Mining Industry Subvention. In the Finance
Accounts 1924-5 no issues were made under either of the two
headings.
Negligible amounts of subsidies under the Trade Facilities
Act 1921 (i I and 12 Geo. V, c. 63) have been left out of accoun .
Other very small subsidy items have been omitted, e.g. Export
Credit Guarantees, where the effective amount of the subsidy is
probably equal only to the difference between the insurance
premiums which the firms in question would have to pay to the
insurance companies and the effective insurance premiums paid
under the official scheme.
Only the Sugar Subsidy has been included in our net output
figures presented in the table on pp. 1 24-5. In doing this we foUow
the practice of the Censuses of Production. The Coal subsidy and
Road Fund payments have not been added as neither of them
seems to appear in the Censuses of Production.
Excise
We have tabulated all the excise duties paid on the products
of the Trade Groups recorded by the Censuses of Production.
The latter show in one ^vay or another all the excise duties, with
the exception of duties on spirits. Those in the table (pp. 166-7)
cover the bulk of the excise duties returned in the Finance
Accounts of the United Kingdom, the most important excep-
tions being the Entertainment Duty and the Licence Duties.
E.g. out of a total of ;^i66-7 mn. of net excise duties returned in
the Finance Accounts 1935-6, the table on pp. 166-7 covers
;C94-i mn. Motor Vehicle Duties are not included.
The excise duties in the table are returned only at their net
receipt value except in those cases in w^hich there is a large item
of Drawbacks, Rebates, Repayments and Allowances repayable
to the industries mostly on articles exported. In the latter cases
also the excise duties are returned at their gross recepit value,
and the Draw^backs, etc. are given separately.
In the Chemical and Allied Trade Group (IV) the duties
affected Saccharine, Patent Medicines (Labels), Petroleum and
Matches. In the table they are all lumped together. In the
Censuses of Production these duties were returned under the
headings of two sub-groups: No. i, ‘Chemicals and Dyestuffs’,
and No. 8, ‘The Match Trade’. The petroleum excise duty,
which was very small, is left out of account.
170 APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES
The excise on Artificial Silk has been charged since July 1925.
In the case of excise on Sugar in 1924, owing to the practice
of refining foreign raw sugar imported in bond, it is difficult to
state which part of the total excise duty returned by the Census
authorities belongs to import duties. In 193^ estimated
excise on sugar was paid from the following sources: 7(^1 *3
was paid on the product of firms primarily engaged on beet-
sugar production and ^^0*8 mn. on the products of other firms
entering into the Sugar, Glucose and Molasses Trade Sub-
Group. In 1935 the former contributed £1 mn. and the latter
^1*5 mn.
The excise on beer, falling on the Brewing and Malting Sub-
Group, is the largest of all such duties. In the 1924 Census it was
estimated net at ^75*8 mn. and it was included in the net output
of the Sub-Group, thus swelling it compared with all other items
of Trade Group XII (Drink) .
In the case of both the Sub-Groups Spirit Distilling and Spirit
Rectifying, Compounding, etc. the Censuses of Production did
not state the amount of excise. In neither of the Censuses of
Production was the duty included in the net output. In the case
of Spirit Distilling the value of spirits was returned exclusive of
duty. In the case of Spirit Rectifying, Compounding, etc. the
amount of duty was included both in gross output and in the
cost of materials, and consequently automatically excluded from
the net output values. The gross value of dutiable spirits rectified,
compounded, etc. for home consumption was returned inclusive
of duty, whilst the value of spirits exported was recorded less
drawbacks.
A small duty was collected on Aerated Waters, British Wines,
Cider, etc,, the amount of which was not stated in the 1924
Census, though it was included in the net output figure.
A veiy^ small amount of excise was collected on Home-grown
Tobacco. The amount is not stated in the table.
A small amount of duty was collected in the Trade Sub-
Group (XV), Printing, Binding, etc., on Playing Cards. Though
its amount was not stated in the 1924 Census, the duty was in-
cluded in net output.
On the whole the excise duties returned for the same years by
the Censuses of Production agree very closely. The largest dif-
ference occurs in 1924 in the case of excise on Beer, which in the
1924 Census is returned at £j5-8 mn., while in the 1930 Census
and in the final report of the 1935 it is returned at ;;^74*i mn.
APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES 171
In 1935 the Preliminary Report of the 1935 Census returned
5^56-1 mn. of excise on Beer; the Final Report reported
£^^■2, mn.
Minor differences occur in 1924 in the case of sugar duty,
which in the 1924 Census was returned at ;^i5-8mn. and at
^15*7 mn. in the other two Censuses. In 1930, the 1930 Census
reported £2*1 mn. of duty on sugar while the Preliminary
Report and the Final Report of the 1935 Census returned
;^2*3 mn. A similar minor disparity was observed in 1935 be-
tween the Preliminary Report of the 1935 Census, which re-
corded £2-4. mn. of excise duty on sugar, and the Final Report
(of the 1935 Census), in which the duty was £2*^ mn.
The returns of excise in the Censuses of Production and in the
Finance Accounts agree fairly closely. The wdest disagreement
was observed in the Sugar, Glucose and Molasses Group in 1924,
where the excise duty in the Census of Production was returned
at p^^o*8 mn. in the Finance Accounts 1924-5.
The chief reason for this discrepancy is that the excise in the
Finance Accounts covered only duties on glucose. In the case
of the Aerated Waters, etc. Trade Sub-Group, in 1924 the value
of excise was reported in the Census as ^^0*4 mn., while it was
higher in both the Finance Accounts for 1923-4 and 1924-5. In
1930 the Cemus returned ;£'o-4mn. and in the two Finance
Accounts 1929-30 and 1930-31 the duty was returned at a
higher value.
Customs
Sources. All the data referring to Customs are derived from the
Finance Accounts of the United Kingdom; none seem to be
available in the Censuses of Production except in the case of
petroleum.
Gross and Net Values. With the exception of Petroleum, where
the Drawbacks are relatively very small and which are returned
net, the table (pp. 1 66-7) presents the customs duties at their gross
value and states separately the amounts of Drawbacks, Rebates,
Repayments and Allowances as reported in the respective
Finance Accounts.
Trades Covered. The table covers the customs duties in the
following trades : Trade Group IV (Chemicals, etc.), Petroleum ;
Trade Group VIII (Textiles), Silk and Artificial Silk; Trade
Group XI (Food), Cocoa and Sugar Confectionery; and Sugar;
Trade Group XIII, Tobacco. Those duties cover a large part
of all customs receipts; thus e.g. in the financial year 1935-6 the
1/2 APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES
table covers 134*1 nin. of net customs receipt out of a total of
£196*6 mn. returned in the Finance Accounts 1935-6. The duty
on sugar includes customs on refined and unrefined sugar,
molasses and glucose, saccharine and articles containing sugar.
The duty on cocoa includes cocoa preparations, cocoa butter,
and husks. The duty on tobacco includes, snuff. The duty on
petroleum returned in the 1930 Census of Production referred
to duty paid by firms on oil purchased and refined by them.
In selecting the customs duties included in the table we have
had in mind only those articles which mainly constitute the
materials entering into further stages of production in this
country. It would seem that the duties paid on imported goods
ready for consumption should not be added under any con-
ceivable definition into the net output of the factory and non-
factory trades.^
The distinction which has been drawn between goods entering
into further stages of production in the United Kingdom and
goods entirely ready for use is not clear cut. Only a part of the
total petroleum imported is subjected to further treatment in
this country; similarly with silk and artificial silk, cocoa,
tobacco and sugar. Sugar refining since April 1928 received a
special encouragement in the form of reduction of the duty on
raw sugar with the maintenance of full protection on refined
sugar. This increased immensely the amount of foreign raw
sugar refined in Great Britain.
After 1931 the classification into the two groups becomes
gradually more difficult, owing to the impossibility of splitting
up such items as ^Abnormal Importations’, Customs Duties,
^General Ad Valorem Duties Goods’ appearing in the Finance
Accounts 1 93 1 -2. These items, however, are not very large and
they have been excluded from the table. In the 1932-3 Finance
Accounts the goods liable under the Import Duties Act 1932
make their appearance for the first time; and in 1934-5 we find
a new item, 'Duties on certain imports from the Irish Free
State’. All these duties, which amount to some £35 mn., have
been excluded from the table for reasons stated above.
Subject to the corrections just mentioned, the customs duties
in the table represent the duties on the bulk of materials and
semi-manufactured goods used in the United Kingdom.
All the entries of the net output in the table in Chapter III
{p, 164) are net of excise duties. In the 1924 Census of
I In estimates of Real Income, however, they have their place. See
Chapter iv, pp. 187-8.
APPENDIX II. EXCISE, CUSTOMS AND INDUSTRIES 1 73
Production a number of excise duties were included in the net
output figures, viz. ;^i*4mn. in the Chemicals, Dyestuffs and
Drugs Sub-group; ;^i-8 mn. in the Match Trade; mn, in
the Sugar, Glucose and Molasses Group; mn. in Brewing
and Malting; ;;^o*4 mn. in Aerated Waters, etc.; ;^o*i mn. in the
Playing Cards, Printing, Binding Group, etc. Their total value was
j^95*3mn. Excise dutieson spirits formed a prominent exception.
The data derived from the Censuses of Production and from
the Finance Accounts do not cover precisely the same period.
The excise derived from the Censuses are estimates of the duties
collected in the Census year. The information from the Finance
Accounts corresponding to each datum from the Census covers
the financial year ended 31 March of the Census year and an
analogous period of the year following the Census. On the
whole the figures of excise given in the Censuses lie within each
pair of figures from the corresponding Finance Accounts, as
one would expect prima facie. The only exception was the
excise on Aerated Waters, etc. in 1924 and in 1930, when the
Census figures were lower than either of the figures in the
corresponding pairs of figures in the Finance Accounts. The
differences, however, are small.
Subsidies on dwelling-houses raise so many problems both of
a statistical and of an economic character that it has not been
possible to treat them on the same lines as those followed in this
Appendix. In the table, pp. 126, the value is that of the finished
product, less materials, etc,, and therefore includes any subsidies
on building in the same way that the value of the net output of
sugar includes the sugar subsidy.
The totals represent the aggregates of the returns from each
source for any particular year. In some cases these totals are
incomplete in so far as e.g. the Censuses of Production provide no
information as to some subsidies, while the Finance Accounts
leave out others. In other cases, such as sugar, the 1924 Census
of Production returned some of the customs duties under the
heading of excise duties, as has been already mentioned.
The large fluctuations in the totals are due partly to cyclical
fluctuations and partly to changes in the rates of duties charged,
e.g. there was a heavy increase in the customs duty on hydro-
carbon oil between 1930 and 1935. In the case of beer the
quantity on which duty was paid (home made) fell from 21 mn.
standard barrels in 1924 to i8| mn. in 1930 and 16 mn. in 1935.
The excise duty per barrel at 1055° amounted to 8or. in 1924-25,
^s. in 1930-31, and 80s, in i935“”36.
174 APPENDIX III. NET OUTPUT OF SMALL FIRMS
APPENDIX III
NUMBERS EMPLOYED AND NET OUTPUT
OF SMALL FIRMS
The table on pp. 1 76-7 refers to the net output of and the numbers
employed by firms employing on the average ten or less persons
in Great Britain and five or less persons in Northern Ireland.
It covers the three Censal years 1924, 1930 and 1935.
The main trades in which small firms are important are:
Building and Contracting; Building materials; Chains, nails and
screws; Motor and Cycle; Carriage, cart and wagon; Plate and
Jewellery; Tailoring; Boots and Shoes; Bread and Cakes;
Timber saw-milling; Furniture and Upholstery; Printing and
Binding; Blacksmithing (in 1924).
Repair work. In some trades a considerable proportion of the
net output contributed by the small firms consisted of repair
work. This applies to Building where a considerable proportion
consisted of repair work and re-decorating. Some 43 per cent
of small firms in 1924 in Tools and Implements were doing
repair work, the corresponding percentage in 1930 was 45.
Of all small firms in Group VI (Engineering, etc.) in 1924
some 60 per cent of their total net output was contributed by
repair and other work and 40 per cent by manufacturing output.
In the same year the repair work constituted 16 per cent of the
total repair work of all firms in the group, while the manu-
facturing output constituted only some 2 per cent of the whole
group.
About 10 per cent of the net output of the small firms in 1924
in the Finished Brass Sub-group (Group VII) consisted of repair
work, while in the Plate and Jewellery Trade the same con-
stituted 32 per cent. In the Watch and Clock Trade some
75 per cent of all repair work done by all the firms went to the
small firms. In addition to that some repair work was carried
out by retail trade firms employing one or two assistants for
fulfilling repair orders of customers.
In 1924 some 33 per cent of the net value of repair work of
all firms in the Coopering Trade (Group XIV) was contributed
by the small firms.
Apart firom that many small firms are engaged in manu-
facturing goods which often differed considerably in. type and
quality from those manufactured by larger concerns.
APPENDIX III. NET OUTPUT OF SMALL FIRMS 175
Allowances and Omissions
In several cases small allowance was made for Northern
Ireland, e.g. in Trade Group VIII, Linen and cotton, and
Group X (especially in the case of Tailoring) ; Trade Group XI,
Food, Butter; Fish-curing; and Trade Group XII (Beer);
Saw-miUing, Furniture and Upholstery (Group XIV). In
most cases when allowances were made they varied between
I and 3 per cent.
A small allowance has also been made where there was some
industrial activity which was not recorded by the Census, such
as the output of the inmates of philanthropic institutions. Tliis
refers in the first line to Coir Fibre, Horse-hair and Leather in
Group VIII, and to Timber, Group XIV, Cane and Wicker
Furniture, Upholstery and Basketware. A number of firms
engaged in repair work in the Building Trade in 1930 were
classed in 1924 together with Electrical Engineering.
The net output of collieries excluded collieries in the process
of development.
In none of the cases was the net output of outworkers added
to the net output of the small firms, as it was impossible to find
out what proportion of the outworkers were employed in the
various sub-groups. In some of the industries, e.g. Tailoring,
the number of outworkers was a considerable proportion of the
total number of workers.
Method of Computation
The data referring to the net output of the small firms
employing less than ten persons are scanty and scattered over
various parts of the Censuses of Production. Whenever the net
output was not available directly from the Census, it was
estimated as follows :
In some cases the gross output of the small firms not making
returns in 1924 was estimated by the Census authorities. From
those gross output figures the net output figures were computed
by assuming that in the case of small firms the net output bears
the same relation as that of the larger firms.
For the other years the net output of the small firms not
furnishing returns has been arrived at on the assumption that
the net output per person employed in the small firms employing
less than ten persons was equal to that in the nearest size-class
of firms available in the Census (in most cases 1 1-24 workers).
In those cases, however, in which the latter was larger than the
176 APPENDIX III. NET OUTPUT OF SMALL FIRMS
Numbers Employed and Net Output of Small Firms in the
Main Industrial Groups
Inset : numbers, etc. of smaller groups in which 5,000 or more were employed
Numbers employed*
Industrial group or sub-group
1924
2930
1935
I, 11. Mines
10
10
9
Non-metalliferous
5
8
8
III. Building, etc.
251
183
i 275
Materials
6
10
II
Building and contracting
140
167
257
l\\ Chemicals
1 1
12
12
W Iron and steel
39
38
32
Hardware
9
1 1
' 1 1
Chains, nails, screws
20
18
1 14
\T. Engineering
87
1 10
1 106
Mechanical
33
26
23
Electrical
6
7
7
Motors, etc.
30
1 63
63
Carriages, etc.
15
1 12
10
VI L Non-ferrous metals
14
16
12
Plate, jewellery
: 6
, 8
5
VIII. Textiles
i ^5
' 19
15
IX. Leather
8
8
7
Leather goods
! 6
5
5
X. Clothing
! 161
141
109
Tailoring
; 123
107
81
Boots and shoes
30
25
22
XL Food
91
99
lOI
Bread
72
75
78
XII. Drink
1 1
13
12
Aerated waters
5
6
6
XIIL Tobacco
0
0
0
XIV. Timber
: 49
72
69
Saw-mills
1 23 1
36
37
Ftimiture
I 21
32
28
XV. Paper
29
33
33
Printing
26
i 28
27
XVT, XVH. Rubber, miscellaneous 1
15
14
XVIII-XXI. Gas, transport. Government |
;
! I I
12
II
Total: All |
696
CD
0
816
Firms making returns i
474 i
716 1
791
Firms not making returns
222 1
64 1
25
* Administrative and operative.
APPENDIX III. NET OUTPUT OF SMALL FIRMS 177
J^umbets Employed und Output of Sinall Fiftns in the
Main Industrial Groups
Inset: numbers, etc. of smaller groups in which 5,000 or more were employed
Net output
Industrial group or sub-group
{£ nan.)
1924
1930
1935
I, IL Mines
2
2
2
Non-metalliferous
I
I
2
III, Building, etc.
25
32
50
Materials
I
2
Building and contracting
23
30
46
IV. Chemicals
3
4
5
V. Iron and steel
5
7
6
Hardware
I
2
2
Chains, nails, screws
2
3
3
VI. Engineering
14
15
18
Mechanical
5
5
5
Electrical
I
I
1
Motors, etc.
6
7
10
Carriages, etc.
2
2
2
VII, Non-ferrous metals
2
3
3
Plate, jewellery
I
I
I
VIII. Textiles
4
3
2
IX. Leather
I
I
I
Leather goods
I
I
I
X. Clothing
22
17
Tailoring
18
16
12
Boots and shoes
5
4
4
XI. Food
19
19
Bread
^5
14
18
XII. Drink
3
4
4
Aerated waters
1
1
2
XIII. Tobacco
0
0
0
XIV. Timber
8
II
14
Saw-mills
3
5
7
Furniture
4
5
5
XV. Paper
5 !
5
7
Printing
— j
—
—
XVI, XVIL Rubber, miscellaneous
2 '
3
2
XVIII~XXI. Gas, transport, Government
4
4 .
4
Total: AU
120
135
159
Firms making retmms
87
124
155
Firms not making returns
33
1 ”
4
BNI
12
IjB APPENDIX III. NET OUTPUT OF SMALL FIRMS
average for the whole Industrial Group, e.g. in the case of
woollen and worsted in 1935, ii^en and hemp in 1930, tailoring,
etc., the more conservative estimate was used by taking, instead,
the average net output for the industry as a whole. By multi-
plying such average net output by the number of workers in
the small firms under ten in each trade, the net output was
estimated for the whole industry^ For the reason above and
owing to the exclusion of outworkers the net output of the small
firms is probably somewhat under-estimated by some 7 to
10 per cent.
In the case of small firms making returns the net output in 1930
and 1935 each trade group, for which data concerning the
size distribution are available in the Final Reports of the Censuses
of Production, has been arrived at in the same way as in the
case of firms not furnishing returns. In the case of those
industries for which the Final Report of the 1935 Census is not
yet available, it was necessary to use the Preliminary Reports
and assume that the net output per person was equal to the
average net output per person for the trade as a whole.
In the case of Building and Contracting, since it is a very
important group, a greater degree of accuracy was attempted
as follows :
We have the number of persons employed in firms making
and not making returns. That figure was multiplied by the net
output per man. The latter is not available in the Preliminary
Report for 1935 and had to be assumed. We assumed a similar
distribution of net output per man in 1935 in the groups of
firms of various sizes as in 1930 and we took the output per man
in 1930 in the smallest size group, which we deflated in the
same ratio as that in which the average net output per man in
^935 has fallen compared with 1930, viz. (199/207). By
multiplying the result by the total employment we obtained
the net output of the small firms for the industry.
At the foot of the table are shown the numbers employed and
the net output of firms from which returns were obtained
separately from others. It is seen that the returns were more
complete in successive Censuses.
Employment Inclusions and Omissions
The employment figures in the small firms include the owners
of the establishments when themselves engaged in productive
processes. They include all persons whether belonging to the
APPENDIX III. NET OUTPUT OF SMALL FIRMS 179
operative or administrative staff, but exclude persons engaged
in retail and selling operations. In 1930 the employment figure
in the small firms in the Bread and Cakes Group excludes some
11,400 employees estimated to be engaged on retail functions
in bakeries. We excluded likewise all outworkers employed by
the various trades on the ground that it was impossible to assess
how many of them were connected with the small firms. This
is unfortunate, since a large proportion of the outworkers
recorded were not improbably engaged by small firms.
Where no direct information was available from the Census
of Production as to the number of persons engaged in the firms'
not furnishing returns, it was assumed as in the Census Reports
that on the average those firms employed the same number as
the small firms furnishing returns in their respective trades.
The average number employed per firm in all industries
together appears not to exceed four in either year.
12-a
Chapter IV
PRICE MOVEMENTS: INDEX OF
REAL INCOME
It is the usual practice, after estimates of money income (on
any definition) have been made for two or more years, to
adjust them by index-numbers of prices, so as to obtain some
measurement of the change of 'real income’. The price index-
numbers are generally weighted by reference to the relative
importance of different categories of expenditure at the first
year under consideration. The result is often expressed in some
such phrase as 'income in year B in dollars of year A\
Though there is no more appropriate method possible than
this or some development of it, it should be acknowledged that
the result has only a numerical or formal meaning, and is not
an exact measure of increased well-being, which is a hedonistic
or psychological concept, and not measurable by statistics- If
in a period every price increased 20 per cent, and every income
50 per cent, this method would show an increase of ' real income ’
of 25 per cent,^ and it would be possible (if supplies were
available) for each individual to increase his purchase of each
article by 25 per cent. But he would not in fact do this and his
re-arrangement of his purchases would depend on his relative
preferences for the particular goods. His aggregate satisfaction
would be greater, but not by 25 per cent or any other numerical
measure. We could say that he could purchase his former
budget of commodities and have one-fifth of his money left ; or
we might reach such a conclusion as 'the partly skilled workman
to-day with 55^. could make the same purchases as the artisan
some decades ago with 4.0s. ^
Formally at least we get closer to the problem by averaging
two price index-numbers, one based on purchases at the first
date, the other on purchases at the second date, thus getting
over some numerical difficulties caused by abnormal changes
in prices of particular goods.
The usual procedure is best expressed in notation. Write K
for expenditure at the first date on Qj, §3? of various
goods whose prices per unit are
I 1*50™ 1*20= 1*25.
PRICE movements: index of real income i8i
Write 5 ?2 5 • • ‘ 5 3 J^2 5 • • • for the corresponding quantities
at the second date. Then k^'Lqp-
The price index-numbers are
and
^QP
^QP
I.qP’
5 based on the earlier budget^
based on the later budget.
k is then reduced to its presumed value at the earlier prices
by dividing by or 72, or by (Irving Fisher’s 'ideal
index-number’) or some other average, e.g.
or
g) j)
S(Q + g)P‘
The ratio of 'real’ incomes is then taken as
Real income second year Tiqp ^ ^Qp __ ^qp _ r r \
Real income first year K ' SQP XQp ^
nr k-i-l2 __ SgP _ j / \
or generally kjK ~ 7.
It is clear that and J2 are weighted index-numbers of
change of quantities purchased, and that they may be calculable
without the intermediate step of forming price index-numbers.
Write ri = gj/Qi, r2 = g2/Q23 -‘-j ^13^23 **• ratios
of quantities. Write Pj^QjPj, ^2== $2-^2 3 •••3
4 — 72^3 •*•3 A ^ ^re the sums expended and K — TiL,
k = llL Then
^ SfQP SrP_SPr ^ ^ ^qp _ 1:1 _ k
2QP K ^^^IlqpIr'^'Lllr Zl/r'
All we need to know for this procedure is the expenditure at
each date on each kind of goods, and the ratio for each kind
of the quantity purchased in the second to that purchased in
the first year.
The method is applicable to an individual or to a group of
individuals or to a nation considered as a unit; but in the latter
case it takes no account of the variation caused by the changed
prices and incomes as between persons, families or classes.
Before the method is used we must, of course, have a clear
definition of national income, in respect both to the separate or
corporate incomes included in the nation, and to the items that
i 82 price movements: index of real income
are counted as income for this purpose. Such questions were
considered in Chapter i.
Particular difficulties are found in connection with goods
subject to customs, excise or purchasing tax, goods the pro-
duction of which is subsidized, goods produced or services
rendered freely by Government (Central or Local), direct
taxation, indirect taxation, and by transfer of money by tax
from one group of persons to another. Agreement has not been
reached as to the appropriate treatment of these problems, and
the method described below is the subject of some controversy.^
We need further notation :
Take three classes of goods:
Selling
Quantity Cost Cost price price
Produced privately; no excise Qi — Pj
Produced privately; tax on sale Q2 112 = 1/2/^2 -^2
Public production, not charged Ll Ha = L^/Ql P3
to users
Write P2=^Tl2{i + T)y so that 112 7^18 a tax per unit sold.
Write E=Q2Tl2T—L2T for the yield of this indirect taxation.
We have
7^1 “III 5 7^3 7C = Z /2 "h L 2 "h -^3 •
Write D for the amount of direct taxation.
For the second year use small letters, k, p, tt, d, e. In
general
Case I. Direct taxation only, applied wholly to the production
of Q2 and J3.
E^e = o^ 7^2~n25 D=II^.Q2 = L^,
T - ?iA + g2-P2 + g 3 -Ps .. 7 'iA + ^ 2-^2 + o r-^L-f+r^L^
^ QiPi + Q%P 2 + QzPz ^+-^2 + 0 ~ K-D ’
whenrj=yj/Qj, ....
Here and throughout it is assumed that in every case the cost
of production equals the income of the producers (profits, rents,
salaries and wages), and that there are no imports or exports^,
and that all income is spent (in any proportion) on the goods
I is re-worked, with some change of notation, from a paper read to
the Manchester Statistical Society, November 1939.
a The effect of external trade is considered below.
PRICE movements: index of real income 183
produced in the first two classes. The treatment of depreciation
is left open for the present.
J ~ _ /i + /2 + Q _ k — d
^ QlPl'^ Q 2 p 2 '^ ^lAl + ^ 2/^2 ^iAi + 4/^2
This method in this case, however, leads to an absurdity.
For if direct taxation is increased so as to absorb a great part
of income, the denominator of becomes small, is great,
and J2 is small. In a communistic state naturally the method
would not apply.
An alternative method is to regard D as transferred from
private to communal expenditure, so that the goods are
furnished to the community without further payment. We
impute a price equal to the cost price, and write
p^ = 7 T^. Then
and
A
This method does not lead to inconsistent or ambiguous results,
and comes directly from the assumption that a community
decides freely to employ jointly a group of people (say for road-
making, police protection, etc.) instead of hiring watchmen and
men for making up their own roads, etc. In such cases evidently
real income is not affected except by changes in efficiency. The
same argument applies in a democratic community to all public
services. Transfers of income (not in return for services) are
considered later.
Case IL Indirect taxation only.
Here the sum Q2P2 is spent on goods of class 2, of which
Q2Pl2 — ^2 is kept by the producers and L2T—Q2TI2T—E
handed to the Government. E is then spent on the production
of $3, so that also E = L^.
As in Case I it is assumed that the community decides to
provide goods or services (such as teaching or street-lighting)
acting as a single employer. But the individuals actually spend
all their money on goods, and decide how much to buy at the
price Pg by ^be same considerations as in buying the untaxed
goods (Qi at price Pj). If all goods were taxed at a uniform rate,
it would be completely indifferent whether the sum was raised
by direct or indirect taxation, unless the incidence of taxation
on different classes was changed, except in so far as the change
184 PRICE movements: index of real income
in quantities bought or produced varied from one commodity
to another, and this result should appear in our formula.
In this case
_ YiqP ?i n 1 “b ^ Q _ -^I + 7*2 Z^2 'b ^2 .^2 ^
^WP^Qi ni + {i + T)^q\ X o ^ +
Ti A +^2-^2 + ^2-^3
K
A j ’^g2^2(^ "bgs ^ ^ ^
^ QiTTi + Q2^2(^ +^) +Q3 X 0
If T and t were also imposed on class i, and =r2 = r3, then
(rj -f r2 A) h + A) ^ A i
J^=:ri = A both in direct and indirect taxation.
The difference between the effects of direct and indirect
taxation is therefore to be found in the difference between the
relative amounts bought when the price of one or more, but
not every, commodity is raised by excise.
To simplify the problem assume that there is no change in
the total number of occupied persons or of number of incomes
or of average income. These assumptions detract little from the
generality of the argument.
Take the case where T=o, but taxation (t) is imposed in
the second year. Write qi — Qi{i-hu)y = 93 = ^3*
Here u and v are positive if (as is normally the case) there is
a transfer of production from the taxed to the untaxed article.
It is assumed that the quantity of Government products is the
same as under private enterprise and that the pre-tax price
equals cost price. Then
r __ 9i “b $'2^2 + 93113 _ L1U — L2V
$10^ + ^202 + $303-'-^ K ’
I _ + Q2'”’2(^ +^) + Q3 ^ Q
^2 9l + 92 7^2 ( I + ^) + 93 ^
since
U
i-f« i—i^
(i +t)
^ 1+4 + 4
4 I 4+4
I "htt I — t?
k
_ I / i^u (4 + 4)
i+u'^ l^V )
PRICE movements: index of real income 185
The simplest case is when there is no change in the cost of unit
production owing to the change in output in either class i or
class 2. Then
LJa
Qi
4
Q2
u
La ^
^2’ Q3 ?3
ij(i4'w)5 /2 — ^ 2(1 v)y
Since it is assumed that there is no change in total income.
+ Z/2 -^3 “ "f” 4 ^3 5
XL ^ ^2 ^ •
The income (or wages, profits, etc.), is transferred from
producers in class 2 to producers in class L^u. Then
Ji = i and —
^ J2 ^ i-vj
Thus, since v is to be taken as positive, Jg is less than unity and
there is a loss of real income owing to the transfer.
But if the untaxed article is produced under conditions
of diminishing or constant return while the taxed is under
increasing return, then /2/?2 is greater than ^2/^2? ’W’hii^ hlii i^
equal to or greater than Write
lilgi^{i+x) LJQi and /2/?2= + 5 ^) ^2/^2*
Then, neglecting products ux and vy^ the equation of incomes
gives
ij {u+x) —L^ {^~y ) =0
, y L,x-\-Lm
and Jj = I * ^
Then both and J2 i^ss than unity, that is, real income
decreases.
But if Li is produced under conditions of increasing return
(y negative) and under constant or diminishing return {x zero
or negative), real income increases.
These results are believed to be consistent with those first
stated by Marshall [Principles of Economics^ 19365 Book v,
Chap, xni, especially pp. 468 seq.).
i86 PRICE movements: index of real income
Case III, There is no additional assumption needed for the
general case where there are both direct and indirect taxation.
The imputed price per unit in class 3 is now DjQ^.
i) + £ == whole cost of Q3 = £3 , and E—L^T as before.
The formula is simplified by writing D = ££3 and £ = ( i — i?) £3 .
Then
7 ^ 1-^1 "^^ 2 {-^2 -^3
When R=::i=r-we have Case I ; when £ — 0 == r we have Case II.
The conclusions about the effect of transfer from class 2 to
class I apply in a modified form, which it is not necessary to
elaborate here.
There is no need to restrict the analysis to three commodities^
one in each group. Each class may be regarded as containing
any variety of goods and prices, and in class 2 the rates of
customs or excise may vary. The complete formulae may then
be written :
A ^ /^Lisl J- T. +0] I „ V
Each summation is extended over s—i, 2, ... n, where n is the
number of separate goods in a class, and R = DI{D + E),
r=dl{d+e), as before.
If one or more of the goods is subject to subsidy, we can either
relegate it to class 2 with a negative value for a or t^, or
treat it as a modified item in class 3. In the latter case, if there
are only three commodities and no direct taxation, we have:
IfJi — rjZj + rjZjCi + T) +r^L^{i —S),
A
A
where S, s are the rates of subsidy per unit value cost.
Here the tax is used to subsidize other goods and L2T=L^S,
When ,S'=i=j, we come to Case II above, with
L^T and l2t available for free government goods.
PRICE movements: inbex of real income 187
We can treat depreciation either as subtractive from income
throughout, or include its amount in income and goods allotted
to replacement under expenditure, thus merging them with
savings, taken as devoted to purchase of capital goods.
Now introduce changes in class 3, writing = {1 w)
and ^3/^3 == (i + ^) Then, if the cost per unit increases,
is positive. It is found that, when products of u, v, Xy y, z
are neglected
KJ^ = jfiT 4* L^u — L^v + Z3 {R {w-\- v) — v}
klJ2 = -ST-h L^x + £2^ + L^{z+ - r) (w + t;)}.
In the simplest case where k= Ky = L^y R— i, r = 0, that
is constant expenditure and a change from wholly direct to
wholly indirect taxation,
I (Ji -f J2) = i - ilK-{L^x 4- L2y 4 - 1X3 (-C + v)}.
The restriction of the formulae to a closed economy where
there are no exports or imports may now be removed. If at
the two dates we have (assuming value of £=0)
Exports Imports
Price P p P' p'
Quantity Q q Q' ?'
Value LI L V
where PQ = L=:i' = P'Q', pq^l^V=p'q\
Write q = r^Q and q' = r^Q\ Then in the numerator of
when we consider consumption rather than production, we
must substitute S q'P' for ^qP, where this expression stands for
the part of the product that is exported, that is, Hr^L' —
for Now, as we cannot allocate particular imports to
particular exports, this must be generalized by writing r^-SZ^
r^TiL for Sr^-Z' and Sr^Z, where
I' llq'F V I
‘ SQP L ■
and li and 4 a,re import and export price indices.
Hence r^—r^xP, where and measures the ‘terms
of trade \
l88 PRICE movements: index of real income
Thus, finally, we write instead of for exports,
as perhaps might have been seen without the analysis.
Similarly, in the denominator of /2 "^^ite S— for S
^ 'e ’e
where
SQ'/' . ^qp
F and F' are weighted respectively with q, q' and Q, Q'.
There remains the question of transfers of income by taxation,
where the proceeds are devoted to payment for past services
(interest on the national debt) or for no services (old-age
pensions) .
Where, as in this country, the proceeds of direct and indirect
taxation are pooled, and there is seldom any allocation of a
particular tax to a particular object, the only unambiguous
treatment seems to be to suppose that these expenses are met
from direct and indirect taxation in the same proportion,
R: i —R, as are those for Government production.' If £4,
are the sums transferred in the two years, we have to subtract
RL^ , r/4 (the contributions of direct taxation) from total income
(including pensions) and insert terms £4(1 — i2), /4(i — r) in the
terms depending on indirect taxation. The results are
T _ t'l£i + f 2{£2 + (£3 + -^ 4 ) (^- +
' £i+£ 2+£3 + £ 4 (i-i 2 )
Y /j + ^2 d" ^3 "I" ^4 ( t — r)
+ i/^ 2{4 + (^3 + y (I -r)} + '^lr,hr'
To recapitulate the principal assumptions that are novel in
the foregoing analysis:
Direct taxation is the transfer of income from personal to
communal expenditure, and the effective or imputed price of
communal production is determined by the relation of the
quantities communally produced to the amount of direct
taxation. If there is no indirect taxation, this price is the cost
price.
i Other hypotheses are worked out in the paper at Manchester referred to
above (p. 182). Admittedly there is an unresolved difficulty in this treatment.
But a compromise method by which specific taxes for a specific object are
credited to D or to -E as the case may be, and the rest are pooled, is not
unreasonable.
PRICE movements: index of real income 189
Indirect taxation is included in the selling price of taxed goods ;
its proceeds are directed to cheapening Government-produced
goods, so that their imputed price is determined by direct
taxation only. If there is no direct taxation, then the cost of
Government goods has been included in the prices of the taxed
articles and their effective price is zero.
Mr Colin Clark and others include in the numerator and
denominator of not only the price in class 2 after taxation,
but also Government goods at cost price. In our notation this
gives
A j + L2 "1“ A 4 " A3 , = /j 4 - /2 4 " ^ + ^3 5
where
j 4 * ^2 ( ^ 4 * if) 4 " ^3
Ai -}" ^2*^2 ( ^ 4 * A) 4 * ^*3 A3 Aj -j“ ^2 (A2 4 “ A) + 7*3 A3
In order to make this harmonize with the usual method of
deflating the second year’s income by an index-number of
prices so that
Real income in 2nd year _ Money income in 2nd year
Real income in ist year Money income in ist year
an entity is created called ‘gross income’, to obtain which the
yield of indirect taxation is added to personal incomes. By
some writers it is then assumed that this gross income is
spendable on commodities with the apparent conclusion that
a government can increase income by indirect taxation on any
commodities. This seems to the writer to arise from confusion
of thought or of definition. For simplicity take the case where
there is no direct taxation. Then the whole of the income of the
nation, including that of those engaged in Government pro-
duction, is spent on goods of classes i and 2 :
A — Aj4-A2 + A 3 — Q2A2 — A| 4* A2 4- A.*
A, the amount of taxation, is the source of the income A3 , and
A=A3. There seems to be no justification for the creation of a
fictitious income to harmonize with a particular price index-
number. The objective is not money income, but a weighted
index of production or consumption. Some of the writers who
use this method do not appear to have offered any reasons for
taking Government goods at cost price, while taxed goods are
* Since cost price, and ^2= cost price (i + P).
igo PRICE movements: index of real income
taken at their selling price. But Professor J. R. Hicks {Economica,
May 1940, pp. 1 16-18) goes further into the question. He
arrives at the definition ‘Social Income including public
services = all private incomes + indirect taxes subsidies — pen-
sions including public services at their cost price.
He argues that a commodity should not be valued at zero
unless it is provided in unlimited quantities. ‘Now hardly any
of the Public Services are such that no additional satisfaction
would result from extra e.xpenditure upon them— which is the
condition for it to be appropriate to value them at zero.’ But
in the treatment developed above, it is the selling price that (in
the absence of direct taxation) is placed at zero, while their value
is taken at the amount of indirect taxation which equals cost
price. It is not assumed that no further satisfaction would be
obtained by increasing these services. The position is that the
community is (for example) willing to pay more for its tobacco
in order to provide more teaching. Equilibrium is at the point
where additional teaching is balanced against less tobacco, and
this is on all fours with the balance between the prices and
consumption of other commodities. Professor Hicks’s and
Mr Cohn Clark’s methods result in the paradox that social
income can be increased indefinitely by increasing indirect
taxation. In the method adopted above indirect taxes are part
of private incomes, namely the incomes of persons rendering
public services. Fortunately it is not necessary here to decide
on the merits of the rival formulae, since in the period 1924-38
the results of the two methods differ very slightly' (resulting in
any case only from differences in weighting the quantity
I Write for < 7 ; in Case I (p. 182).
Let E=X.K, i.e. A is the ratio of indirect taxation to the total of incomes.
Then the measurement in the text, p. 184, is
iJi = oJi |i + A
If r2<r^, that is, if production of the taxed commodity diminishes
relatively to that on the group transferred to Government,
but the relative difference depends on the product of two fractions each
of which is usually small.
Mr Clark’s measurement reduces to
when is neglected. This differs from by a quantity which is very
sxnaii, unless is abnormally great.
PRICE movements: index of real income igi
relatives), while the margin of uncertainty in other factors,
especially those relating to services as contrasted with goods, is
quite considerable. When, as in 1941, indirect and direct
taxation form large proportions of total income, it may be that
the differences would be significant.
It is clear that the formulae for the ratio of real incomes
depend on weighting quantity changes and that price move-
ments do not enter explicitly. Prices only enter in the choice
of weights applied to quantity movements. But if the change
in the value of though its measurement depends on arbitrary
definitions, is regarded as being of interest and importance, it
can be deduced from relating the measurement of changes of
real income to that of the changes of money income.
APPLICATION OF THE FORMULAE TO THE
NATIONAL INCOME OF THE UNITED
KINGDOM, 1924 TO 1938
In the accompanying tables index-numbers of quantity are
given with (A) 1924 as base and (B) 1935 as base. These index-
numbers are weighted with the estimated income in each class,
in (A) that of 1924 (£), in (B) that of 1935 (/).
The results^ are given on the basis of Cost price (line 9) and
on the basis of the formula developed above (line 12).
It will be seen that the two different formulae give results
varying by less than i per cent from each other in most cases.
For the period 1924 to 1935 we have:^
Mr Clark’s
Cost price Formxila method
(A) Forward working 100 : 12i-i 100 : 120*2 100 : 1 19*9
(B) Backward working Jg 100 : 120*3 100 : 1 19*3 100 : 1 18*9
But the backward working (1935 base) gives a perceptibly
smaller increase than does the forward working.
1 The formulae are:
(A) line 9, 1 00 SL ^ -f- SL,
line 12, 100 (SL. S (i,+£) + S - Si,
where E is the amount of indirect taxation, R the ratio of direct to total
taxation. SZ/j includes lines 4, 7, 8; SZg lines 10, ii ; lines 5, 6.
(B) The formulae are as in (A) with small and capital letters interchanged.
2 In the calculations the first decimal place was used. In the table the
nearest units are given.
igs PRICE movements: index of real income
Mr Clark, if I understand him rightly, includes indirect
taxation and Government goods at cost price. The difference
made is quite small.
The averages of and J2 are I20‘6, 119*7 119*4,
differences which are quite insignificant.
Thus, as was to be expected, the differences that arise from
different systems of weighting at one date are quite small, but
those from variation of the base year are slightly greater, though
within the kind of margin of error that must attach to this kind
of estimate.
On the other hand considerable importance attaches to the
measurement of the changes of quantity. Physical production
(lines 4 and 6) accounts for 43 per cent of the value in 1924
and is credited with an increase of 35 per cent in 1935, while
Services (lines 6 and 8) account for 50 per cent of the value
and are credited with a rise of only 10 per cent. Below it is
shown how difficult and doubtful is the change to be attributed
to Services ; and the effect of different hypotheses on the final
index-numbers is discussed.
After the table there are given explanations and details of
all the estimates, so that it is possible for a student to compute
the results on various formulae or after different judgment of
treatment of the basic series.
PRICES
We can deduce an index-number of prices in general by
dividing the index of money income by that of quantity.
Index-numbers
Prices
Years
Total
Total
Quotient
Board
Cost of
Wage
quantity
income
or price
of Trade
living
rates
1924
100
100
100
100
100
100
lOI
98
97
98
100
lOI
1926
9B
96i
98
89
98
lOI^
1927
107
1 00
934
85
95
IOl|
1928
107
lOI
95
84
94
lOI
1929
no
lOI
92
82
94
100
1930
107
98
72
94
99
1931
104
85
62J
90
98
^932
105
85I
81
61
84
98
^933
X09
83
62
794
95
1934
954
83
83
8oi
95
1935
120
lOI
84
84
8i|
98
1936
125
107
86
68
84
984
*937
127
112
88
78
88J
102
1938
123
112
91
73
89
105J
PRICE movements: index of real income 193
The Quantity index used is the average of (A) line 12 and
(B) line 13, viz. i(</i + ^2)*
The money income series is computed from Total B, Table IX
(p. 81 above).
For comparison the Board of Trade index of Wholesale
Prices is given and the Cost of Living index. Except in 1931-33
the new index lies very close to the Cost of Living.
Also the Wage-Rate index of the London and Cambridge
Economic Service is entered. The Cost of Living index is
approximately half-way between Wholesale Prices and Wage
Rates, except in 1 929-32, when it is nearer the Wage Rate index.
A rough comparison is possible between the increase in the
Quantity index discounted for the growth of population, and
the increase of real wages as estimated from the quotient of
the Wage index by the Cost of Living index. But we should
use, instead of the Wage index in the table above, one modified
to allow for increased earnings, as discussed on pp. 64, 65 above.
This revised index of earnings is :
1933 1934 1935 1936 1937 193S
95 95i 99 looi ^06
We then have :
Quantity index
adjusted to
Quotient of earnings
per head by Cost
Year
population
of Living index
1924
100
100
1925
lOI
lOI
1926
97 1
103
1927
' 106
107
1928
105
107
1929
108
106
1930
105
105
1931
102
109
1932
102
114
1933
105
119
1934
no
119
1935
121
1936
1 19
120
1937
120
n6
1938
116
1^9
Over the whole period the increase is nearly the same on both
sides. But between 1927 and 1932 the Cost of Living index-
number falls rapidly and causes an increase which is not
confirmed by the index of Quantity. The fall of prices in this
period was in primary foods and materials, not in services or
cost of manufacture.
BNl
13
Allowii^ for effect of changing ‘terms of trade’.
Table B
National Income, Index-numbers of Quantity: 1935 base
CO
CO
C)
102
100
102
Of to 0 ^ 1 Of
0 0 0 0 ! c
coco
z ^
CO CO
0 Of
!>•
CO
CO
mco CO
M (7) H-l
^ CT5CO <05
« ^ 05 0 <05
CO
0
(£5
CM 0
>-< l-t
CO f>-
0 Cf
CO
CO
CO
CO 0
000
<0 CO Of CO Of
0 0000
2
CO Of
0 0
w
fHl«
Th "4
0 CM
10
CO
CO
000
000
0 0 0 0 0
0 2 2 2 2
0
0
0 0
0 0
0 (75
0 *-(
CO
Tj-I « lO
Oi 0 CO
iHlM
lO loco CO <s>
05 05 05 <75 <75
m
05
CO 'Sf
<75 (05
ih|ji
CO
CX)
CO
CO
Cl
c£j jo-r^
CO OiCO
CO CO <r>
CO CO 05 05 05
Cf
(75
0 0
05 05
CM 0
<75
Of
CO
O)
0 CO ►-«
CO coco
« coco '^^CO
CO r- 05 <05 05
C75
00
<75 05
CO CO
<75 <0
CO 0
CO
cn
0(JD «
CO CO CO
tC5 Of
00 r«> 05 <75 05
00
00
oo 0
<75 0
t-t]iN r-(!sj
00 m
CO 0
0
CO
01
CO
CO CO CO
CO Of lO 0 UO
00 CO <7505 05
<75
CO
0
C75 ^
0
05 0
CO
Of
Oi
uo CO
CTiCo a>
CO CO r^co
CO CO 0500 05
Cf
05
CD 0
<7> Cf
H)(N
CO 0
05
00
Of
CO
!>•
CO CO 00
Of 000 CO CO
CO 00 0500 <05
0
05
M CO
05 ^
0
^ 2
r-s
Of
CO
oco 0
cnco 05
10 -^co coco
00 CO 0500 05
0
05
Cf (75
<75 M
0 CO
<75 0
CO
Of
CO
Of Of
I r^oD f>*
CO coco <NCO
CO CO <7500 <75
CNF
CO
<75 CO
00 CM
CO <75
CO cr>
Of
CO
0 Of 0
CO 00 CO
10 0
r>. 0500 05
m
00
CO Of ^
CO CO j
1 1
in ^
^ 2
Of
CO
0 w 0
CO COCO
m 00 <N[ 0 <M
CO <75CO <7>
CO
CO
<75 Of
!>■ CO
^ 0
00 0
1935
Value 1
{£ mn.)
lO tn
coco 1 ,
10 - 1
i
0 m lo 0 0
0 mco cof>-
<0 CO t-t
1-^
0
Cf 1
9 1
CO
0 to
0 0
Of *-•
I 1
3.StJ
*5 S bo
^ bo 0
w Cf CO
f-l 0 CO
0 a 0 45
O! e CS 0
ts S'g g S 8
* 0 ffioj
4* incD i>c6
0
8
1 9 U
^ g-g
J-f
05
1
i V
0 ^co
ss
6 w
u
(D
iis 2
? l-i "
N CO
t -4
13-2
196 PRICE movements: index of real income
Explanation of the Table
Weights {L and /). For Industry the net output (including
small firms and excluding Government Products) has been taken
in 1930 and 1935 after deducting 10 per cent as an allowance
for depreciation and any rates that enter into cost.
For Agriculture (which has little weight in the total so that
exact computation is not necessary) one of the estimates for net
output, as discussed on pp. 95-101 above, is adopted for 1924,
and after consideration of Schedules A and B of the income tax
and the numbers and wages of agricultural labourers a slightly
lower figure has been taken for 1935.
For Government Products the net output of physical pro-
duction by the Central and Local Authorities has been written
in for 1924 and 1935. For Government Services in 1924 and
1935, Total Expenditure chargeable against Revenue has been
added to estimated total local rates, and then the interest (and
other service) of the National Debt and the value of Post Office
services has been deducted. From this remainder the amount
already included as Products has been subtracted.
For Houses it has been arbitrarily assumed that the annual
value of houses, as distinct from business premises, already taken
into account in line 4, is 71 per cent of the assessed value of
buildings in Schedule A. This estimate has no authority, except
that Mr Flux appears to have used it in his work on the 1907
Census of Production. The weight is so small a proportion
of the total, and the Quantity index moves so closely with
the general index-number, that an exact valuation is of little
importance.
The totals of L and I are the estimates of National Income in
the table on p. 81 above, obtained by subtracting Pensions,
National Debt interest and Income due to Foreigners from the
total of personal and corporate incomes. The diflTerence between
this total and lines 4, 5, 6, 7 is entered in line 8, and is attributable
to activities outside the Census of Production and Government
Production. It includes transport, distribution, wholesale and
retail, other commerce and banking, professions, domestic and
restaurant service.
In considering these estimates, it is to be remembered that
they are only necessary as weights for the Quantity index-
nuntbers, and precision is only of importance in the larger
categories.
PRICE movements: index of real income 197
Index-numbers of Quantity, In (A) line i is the annual index of
the London and Cambridge Economic Service after Agriculture
is detached. In (B) the change shown by Dr Rhodes (see
pp. 14I5 142 above) between 1930 and 1935, on the basis of 1935,
gives 86 in 1930. For the years between 1930 and 1935 the
changes shown in (A) are damped down proportionately to
yield the smaller increase over the five years. Before 1930 and
after 1935 the changes in (B) are proportional to those in (A).
Line 2. For Agriculture series are formed of the annual
production of wheat, barley, potatoes, sugar, cattle (dairy and
other), sheep, pigs and fowls, each equated to 100 in 1924,
and an index-number is formed by using as weights the
estimated value of their products in 1924.
Line 3 is a weighted average of lines i and 2.
In lines 2, 5, 6, 7 and 8 the index-numbers in (B) are the same
as in (A), reduced proportionally to give 100 in 1935.
Since the results to the home consumer of production for
export are found in quantities imported in exchange for them,
it is proper to include in the index-numbers of quantities con-
sumed (which are those with which we are concerned when
considering income) a quantitative measure of imports. Line 4
shows the result, and since the adjustment from line 3 is small
a rough method is sufficient.
Average price index-numbers of imports and exports are
available in the statistical abstract. The ratios of the export to
the import price index are approximately
Year
Ratio
Year
Ratio
Year
Ratio
1924
i-oo
1929
1*00
1934
I- 2 I
1925
0*99
^^930
I *08
1935
I'lg
1926
1*02
1931
I '20
1936
i-i 6
1927
I’OI
1932
I *20
1937
1*10
1928
1*00
ms
I '24
1938
i*i 8
That is, the Herms of trade ^ improved considerably from 1929
to 1931 and deteriorated from 1934 to 1938.
For Table A write f for the ratio of exports to total pro-
duction, each valued at 1924 prices, t for the terms of trade
and I for the index-number in line 3.
Then the adjusted index, line 4, is I {i +/(^~ i)}; / varies
from 0*49 in 1924 to 0*28 in 1936.
Then the number for 1936 is 139 {i -f 0*28 x o*i6} = 145.
A similar process, based on 1935, is applied in Table B.
igS PRICE movements: index of real income
For line 5 in (A) we have the numbers for 1 924, 1 930, 1 935 from
the Tables pp. 1 48, 1 50 above. For the years 1 925-29 it has been
assumed that the greater increase in Government Products than
for others from 1924 to 1930 was evenly distributed through the
five years. After 1935 the rate of increase is taken as the same
as in line i . Since the weight attributed in line 5 is so small, it
is not important to aim at exact interpolation.
Lines 6 and 8 may be taken together, for we cannot separate
clearly the numbers of persons paid by the Government from
all others rendering services. There is no quantitative measure-
ment of the change in the amount of service rendered by an
individual, and the only available method seems to be to
estimate the number of persons and, assuming that the quantity
of service per head is unchanged, to take the total amount of
service as proportional to the numbers.
The numbers employed in this group cannot be estimated
from the Unemployment or Health Insurance Statistics, since
the former exclude domestic service and most railway employees,
in the latter there is no division by occupation, and both exclude
persons with incomes over >^250. In default of a better method
the numbers presumed to have an occupation are taken from
the table on p. 56 and discounted for unemployment, arbi-
trarily at half^ the percentage applicable to wage-earners. From
these are subtracted the estimated numbers employed in the
Census of Production industries and Agriculture. Thus :
ooo’s omitted
1924
1935
Numbers ‘occupied*
2,040
2,208
Less imemployed
180
292
Less Production and Agriculture
938
916
Services
922
1,000
Index-number
100
108
There is little doubt that the whole occupied and employed
population increased more rapidly than those engaged in pro-
duction;, so that the table which gives an increase from 1924 to
^935 of 3 por cent for all employed^ a decrease of 2 per cent for
production, and an increase of 8 per cent for services, is a priori
reasonable. But these results are hardly consistent with the
amounts of income credited to the persons in lines B and 8, viz.
I If the same proportion were subtracted for both classes, the index-numbers
for Services in 1935 would be 1 10 instead of 108.
PRICE movements: index of real income 199
^1950 mn. in 1924 and 1835 mn, in 1935, a decrease of 6 per
cent; for this could mean that salaries or earnings per head had
fallen 14 per cent in the period. On p. 92 above it is estimated
that salaries had fallen about 3 per cent, including the wages of
shop-assistants. In the same period railwaymen’s earnings had
fallen 3 per cent.
There are many elements of approximation both in taking
the residual income as applying to services and in using the
occupation figures. But the discrepancy between the fall in
income and the increase in numbers is too large to explain away.
If we took 100 instead of 108 in 1935 in lines 6 and 8, the
index in line 9 would become 118 instead of 123, and there
would be a corresponding change of about the same amount in
other index-numbers summarized on pp. 192-3.
The basis of calculation for Housing (line 7) is the number of
dwelling-houses in Great Britain in 1931 5 adjusted to other
years by the number of houses built in each year. This makes
no allowance for demolitions, but on the other hand does not
include any estimate for the increase in hotels and other
buildings, which are not private dwelling-houses nor factories,
etc. accounted for in the Census of Production. From 1924 to
1937 it is thus estimated that the quantity of houses increased
32 per cent, while the assessed value increased 64 per cent; on
this basis rent increased 24 per cent, while the rents (including
rates) used in the Cost-of-Living index increased 8 per cent,
dominated by controlled rents.
For Customs (A) (line 10) the receipts in 1924 are used as
weights for series of quantities taxed (1924 to 1938) for beer,
wine, spirits, tea, cocoa, sugar, currants, tobacco and matches
separately. Sugar and tobacco dominate the reckoning. For
(B) it was necessary to take account also of the duties on oil
and the various new general import taxes. For oil a rough
estimate is possible of the quantities imported. For the change
in quantity of other goods newly taxed there is no obvious
method. It is assumed that the change in the values liable to
tax is proportional to the value of all imported manufactured
goods, and that the corresponding quantities are measurable
by deflating or inflating the values by the import price index
based on all imports. No doubt this method could be im-
proved on by more detailed work, but no reasonable revision
200 PRICE movements: index of real income
could affect the general index-number of quantity (line 12)
significantly.
For Excise (line ii) only spirits and beer have been taken
into account. Index-numbers of the quantities taxed weighted
in (A) and (B) respectively by the excise receipts in 1924 and
1935. The numbers so obtained are applied to total excise
receipts, for (together with liquor licences) they account for
the great part of excise, other than the entertainments tax,
which does not lend itself to any easy quantitative treatment.
When the whole calculation is reviewed and the margins of
error attachable to the items that enter into it are considered,
we can express some opinion about the precision of the main
result, that is, the progress of real income. Naturally it applies
only to income as defined for in Chapter ii (Table IX, Total B),
and it is subject to the vagueness that is intrinsic when an
objective measurement is applied to a subjective entity. The
margins that are of importance to the result are those attaching
to the Index of Production in line 4 and that of Services in lines
6 and 8, and to a much smaller extent to the weights given to
these lines. From 1924 to 1938 we may write the increase in
line 4 at 38 + 6 per cent, so including the estimates in (A) and
(B). For Services the assumption was unchanged efficiency and
there is perhaps a margin of 5 per cent to be applied to the
numbers; if the increase is stated at 10 + 8 per cent we allow for
both uncertainties. Then for the whole (line 12) the increase may
be estimated as between 18 and 30 per cent in the fifteen years,
and the index-numbers as 124 + 6. The extreme limits are im-
probable and the central figure 1 24 may be used as a reasonable
approximation.
The margin given for 1938 may be regarded as cumulative
during the 15 years, so that the earlier entries have the greater
accuracy. The dates and relative amounts of variation from
period to period, for example the rapid rise after 1932, are more
reliable than the numerical measurements of the changes.
BIBLIOGRAPHY OF BOOKS, JOURNALS
AND OTHER PUBLICATIONS RELATING TO
NATIONAL INCOME
The sections of the bibliography are arranged alphabetically, but the
countries are separated. All sections start with United Kingdom.
GLASSIFICATION
A. Theory andjor System (white cards) P> 202
1. National Income 202
a. Total representations or estimates only 207
b. Higher incomes 215
c. Incomes below tax limit 215
II. Division of Income. Theory 215
III. National Wealth 218
B. Statistical Method (blue cards) 227
G. Parts of National Income (pink cards) 23 1
r , Agricultural income 23 1
2. Income out of real property 233
3. Wage income 234
4. Professional income 235
5. Industrial income 235
6. Mining income 235
7. Trade income 235
8. Corporate income 235
g. Undivided profits 236
10. Derivative income 236
11. Financial income 236
12. Income from foreign investments 236
13. Income in the betting industry 237
14. Public income 237
15. Tax and rate questions 238
16. National debt 240
17. Depreciation and other questions of deductions, costs 241
18. Legal questions 241
19. Population questions 241
20. Earned and unearned income 242
2 1 . Income and expenditure of social groups 242
22. Valuation of income, money value, real value 244
23. Inheritance and death duties 244
24. Distinction between capital and income 245
25. Treatment of changes in capital values 245
26. Change in values of stocks and commodities (inventories) 245
D. Sources (grey cards) 246
A card index of the Bibliography is preserved by the National Institute
of Economic and Social Research. The cards show in most cases in what
Library the books can be found, and some of them indicate what topics are
discussed.
202
BIBLIOGRAPHY
A. THEORY AND/OR SYSTEM
AL J^ATIONAL INCOME
United Kingdom
A. L. Bowley. National Progress in Wealth and Trade, 1904.
The definition of national income. Econ. Journ, March 1922.
Evidence before the Select Committee on Income Tax, 1905-6.
(U.K. Sel. Com, on Inc. Tax.)
Three studies on the National Income : being ‘ The Division of the product
of Industry’ ; ‘The Change in the Distribution of the National Income,
1 880- 1 9 1 3 ’ ; ‘ The National Income, 1 924 ’ (with Lord Stamp) . London,
1938.
Wages and Income in the United Kingdom since i860. Cambridge, 1937.
The measurement of Real Income, Manchester. Stat. Soc. 1939,
Some constituents of the National Income (Valedictory address).
Journ. of R. Stat. Soc. 1940, Pt iv.
Morgan Browt^. Sir R. Giffen’s indiscretion. New Liberal Review , April
1902.
Edwin Cannan. Wealth. 1914.
A. M. Carr-Saunders and D. Caradog Jones. A Survey of the Social Structure
of Income of England and Wales. 1937.
Colin Clark. Income and the theory of production. Econ. Journ. June 1 933.
Intemationaler Vergleich der Volkseinkommen. Weltwirtschaftliches
Archiv, 1938.
The Conditions of Economic Progress^ 1940.
H. Clay, Property and Inheritance (post 1933).
F. Y. Edgeworth. Income. Palgrave’s Dictionary of Political Econorny.
A. W. Flux. Industrial productivity in Great Britain and the United States.
Quart. Journ. of Econ. Nov. 1933.
Irving Fisher on capital and interest. Quart. Journ. of Econ. Feb. 1909.
Sir Robert Giffen, Economic Enquiries and Studies. 1904.
W. J. Harris. A comparison of the growth of wealth in France and England,
Stat. Journ. 1894.
J. R. Hicks. Value and Capital. London, 1939.
C. K. Hobson. Work and Wealth, a human valuation. 1914; rev. ed. 1933.
George Howell. The Conflict of Capital and Labour. 1878.
E. Huncke. Die Entwicklung von Einkommensteuer und Einkommens-
verteilung in England. Finanz-Archiv, 1905.
F. Ireson. The People ^ s Progress. 1910.
R. F. Kahn. The relation of home investment to unemployment. Econ.
Journ. iunt 1931.
M. Kalecki. a theory of commodity, income and capital taxation. Econ.
Journ. 1937.
J. M. Keynes. The General Theory of Employment, Interest and Money. Cam-
bridge, 1936,
A. Marshall. Principles of Economics. 1907.
Economics of Industry. 1907.
J. S. Nicholson. Capital and labour, their relative strength. Econ. Journ.
1892.
R. Inglis Palgrave. An enquiry into the economic condition of the
country, Inst of Bankers^ Journ. 1904.
BIBLIOGRAPHY
203
A. C. PiGOU. The Economics of Welfare, 1929.
Wealth and Welfare, 1929.
Net income and capital depletion. Econ, Journ. June 1935.
Measurement of real income. Econ, Journ, 1940.
G. R. Porter. The Progress of the Nation, 1847.
G. L. S. Shackle. Expectation^ Investments and Income, 1938.
G. Findlay Shirras. Volkseinkommen und Besteuerung, Ed. by M. J. Bonn.
Jena, 1926.
A. SoETBEER. Z^r Einkommensstatistik Preussens^ Sachsens und Grossbritanniens.
U.K. Select Committee on the Depression of Trade and Industry. Report
and Evidences of Sir Robert Giifen and Mr Algernon West. B.P.P. 1 886.
Austria
H. Mayer (Editor). Die Wirtschaftstheorie der Gegenwart, Wien, 1928.
Belgium
Fernand Baudhuin. Le revenu national en 1930. Bulletin dTnformation et
de documentation, Banque Nationals de Belgique, Vol. v. No, 10.
Les finances beiges en 1937. Bulletin de Vinstitut de recherches economiques,
1937-S. _ ^ .
Les finances beiges en 1938. Bulletin de Vinstitut de recherches economiques,
i 93 ^- 9 -
Canada
Canada Tear Book, National Wealth and Income. Ottawa (annual).
France
M. Huber. La Population de la France pendant la Guerre, avec un appendice sur le
revenu avant et aprhs la guerre, Paris, 1932.
J. C. L. SiMONDE DE SiSMONDi. Du Revenu Social, JStudes sur V&onomie
politique. 1837-8.
A. R. J. Turgot. Reflections sur la Formation et la Distribution des Richesses, 1 788,
Germany
Biedermann. Einkommens- und Vermogensverhaltnisse in Preussen.
Zcitschrift des Preuss. Stat, Landesamts, 1918.
L. V. BoRTKiEwrcz. Die Grenznutzenlehre als Grundiage einer ultraliberalen
Wirtschaftspolitik. Jahrbuchf Gesetzgebung, Verwaltung und Volkswirtschaft
(Schmoller), 1898.
K. Diehl. Volkseinkommen und Volksvermogen. Beitrage zur Wirtschafts-
theorie. Schriften des Vereins fur Sozialpolitik, 1926.
A. Emminghaus. Einkommen. Renzsch’s Handworterbuch, Leipzig, 1870.
R. Fricke. Konjunktur und Einkommen, eine Grundlegung zur dynamischen
Konjurdziurtheorie, Haiberstadt, 1927.
E. V. Gottl-Ottilienfeld, Volkseinkommen und Volksvermogen. Welt-
wirtsckaftliches Archiv, 1927.
B. Harms. Kapital und Kapitalismus, Bd. i, Heft II. Berlin, 1931* (Vor-
lesungen gehaiten in der Deutschen Vereinigung fiir Staatswissen-
schaftliche Fortbildung.)
F. B. W, Hermann. Staatswirtschaftliche Untersuchungen. Leipzig, 1924.
E. Kleinschmitt. Articles on ‘Volkseinkommen’ in Germania, 25 Nov- 1924?
Hamburgiscker Correspondent, 24 May 1925.
A. Lansburgh. Volkseinkommen imd Soziaiprodukt. Die Bank, 1926,
BIBLIOGRAPHY
H. Losch. Volksvermogen, Volkseinkommen und ihre Verteilung. Leipzig,
1887.
Walter Lotz. Kapitalbildxmg und Besteuerung. Schriften des Vereinsfur
Sozialpolitik, Bd. 174, Heft 4. Munchen, 1929.
F. Lutz. Dst Bc^TiffVolksTeichtuwL in d&t volkswiftschaftlichcn LitcTntuT^ voTnchtnlich
Deutschlands. Erlangen, 1922.
H. G. Mangoldt. Einkommen. Article in Deutsches Staatsworterbmh
(Bluntschii und Brater), Bd. m. Stuttgart, i 857 -' 70 ‘
R. Meyer. Einkommen. Handwbrterbuch der Staatswissenschaften, i. Aufl.
1892-3. Aufl. 1909.
H, Nies. Achille Lorias wesentliches wirtschaftliches Gesetz^ Vohwmkel, 1926.^
R. Nitsghke. Einkommen und Vermogen in Preussen und ihre Entwicklung seit
Einfithrung der neuen Steuer mit Nutzanwendung auf die Theorie der Einkom-
mensentwicklung. Jena, 1902.
O. Pfleiderer. Die Staatswirtschaft und das Sozii^ip'^odukU Jena, 193^*
I, PiERSTORFF. Die Lekrs voM Unternehmergewinn. Berlin, 1875.
Untemehmer und Unternehmergewinn. Article in Handworterbuck
der Staatswissensckafteni 3. Aufl., Bd. vin.
H. Roesler. Zur Lehre vom Einkommen. Jahrbuchfiir Mationalokonomie und
Statistik (Conrad).
W. Ropke. Sozialokonomische Betrachtungen iiber den abnehmenden
Bevolkerungszuwachs. Der Economist ^
G. Rumelin. Beitrage zur Vermittlung des Volksvernuigens und Volkseinkommens.
Das Konigreich Wiirttemberg, Stuttgart, 1863.
Samter. Das Einkommen der Bevolkerung in Preussen. KgL Phys, Oek.
Gesellschaft, Konigsberg, 1873.
G, ScJHMOLLER. On National Income. Evangelisch-soziuler Kongress. Leipzig,
1897.
G. Schnapper-Arndt. SozialstatistiL Leipzig, 1908.
E. Schuster. Die Einkommen: eine kritische Untersuchung, Tubingen, 1926.
Einkommen und Volkseinkommen. v. Diehl, above.
K. Singer. Kapitalbedarf und Kapitalbildung in Deutschland. Ein
statistischer Versuch. Schriften des Vereins fur Soziulpolitik, Bd. I 74 ‘
Miinchen, 1929
A. Soetbeer. Z^r Einkommensstatistik Preussens, Sachsens und Grossbritanniens.
Vierteljahrsschrift fur Volkswirtschaft, Politik und Kulturgeschichte^ 1887-88.
H. Storch. Betrachtungen iiber die Natur des Nationaldnkommens. Halle, 1825.
W. WiNKUER. Einkommen. Article in Handworterbuck der Staatswissenschaften,
4. Aufl., Bd. m.
Wurttembergisches Statistisches Landesamt. Volksvermogen, Volkseinkommen
und Steuerbelastung in Deutschland vor und nach dem Krieg. Mfltteilungen
Nr. 6.
E. WuRZBURGER. Die Sachsische Einkommensstatistik als Masstab fiir die
Beurteilung der Einkommensverhaltnisse. d. kgL Sachs. Stat.
Buros, 1904.
Holland
De Bruyn-Kops. Report on the ‘revenu annuel de la nation’. Int. Stat.
Congress, Pt I, The Hague, 1869.
J, Ort, Het Inkomensbegrip. Amsterdam, 1911.
India
V. K. R. V. Rao. The Pfational Income of British India. 1940.
BIBLIOGRAPHY
205
Ireland
Erskine Childers. Irish Fiscal Authority, In ‘The Fiscal Relations of Great
Britain and Ireland’. Conference of the Royal Economic Society,
Jan. 1912.
Italy
Dettori. Lezioni de Statistica economica, 1918.
L. Einaudi (Spectator). Gli indici della vita italiana in cinquantennio
(1861-191 1 ). Articles on Italy’s National Income in Corriere della Sera^
April 191I3 Feb. 1916.
Rivista economico-finanziaria dell’ Italia nel periodo 1885-1901.
Riforma soziale^ 1902.
A. Garelli. 11 concetto di reddito nella scienza financiana, Milano, 1917.
G. Gini. a Comparison of the Wealth and National Income of Several Important
Nations before and after the War, 1925.
Quelque chifFres sur la richesse et les revenus nationaux de quinze
etats. Metron^ VoL iii, 1923.
Untersuchungen iiber den Einfluss des Krieges auf das Volks vermogen.
Basel, 1924. Reprint from Z^itschrift fur Schweiz^ Stat, und Volkswirtschaft.
A. Loria. The Economic Synthesis, 1913.
V. Pareto, Manuel d^&onomie politique, Paris, 1909.
G. E. Prato. Di alcuni recenti Teorie sul Capitale e sul Reddito e delle loro conse-
quenzi tributarie, Turin, 1912,
Poland
Birmingham Information Service on Slavonic Countries, The National Income
of Poland, Birmingham, 1937.
Russia
Birmingham University. Bureau of Research on Russian Economic Con-
ditions, Memoranda No. 3 : National Income of the U,S,S,R, Birmingham,
1931-
S. Falkner. Ponyate narodnogo dokhada i ego elementi. The Concept of
National Income and its elements. Sotsialisti ckeskve Khozyastro^ Vol. n,
Pt IV, 1929.
V. Kats. Narodny dokhod U,S,S,R, i ego raspredeleine, (National Income of
the U.S.S.R. and its distribution.) Moskow, 1932.
Spain
Banco de Espana. Servicio de Estudios. La determinacion de la renta nacional.
1937 -
J. Vandellos. La richesse et le revenu de la Peninsule iberique. Metron,
Vol. V, No. 4, 1925.
Switzerland
W. Eggenschwyler. Die Bestimmung des Einkommens und die Finanzie-
rung des Krieges. JahrbUcher fur Nationalokonomie und Statistik, 1915*
E. Laur. Wechselbeziehimg zwischen privatwirtschaftlichen und volks-
wirtschaftlichen Einkommen unter Beriicksichtigung der Landwirt-
schaft. Z^^'l^<^hriftfur Schweiz- Stat, und Volkswirtschaft, 1924.
P. Mori (Bern). Das Schweizer. Volkseinkommen, Bulletin de Vinstitut
international de Statistique^ Vol, xxv, 1931.
2o6 bibliography
A. Reighlin. Das schweizerische Volkseinkommenj seine Quellen und ihre
Bedeutung. Journ, de Statistique Suisse ^ 1927-
J. Wyler. Das schweizerische Volkseinkommen imjahre 1924. ^eitschrift
fur Schweiz- Statistik mid Volkswiitschaft^ 1927.
Union of S. Africa
S. H. Frankel and S. D. Neumark. Note on the National Income of the
Union of South Africa. South African Journ. of Econ, 1940.
U.S.A.
B. M. A. Anderson. The Income of the American people and the ratio of foreign
to domestic trader 1890-1924. Chase National Bank, Economic Bulletin,
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M. R. Benedict. Studies in Income and Wealth. Vol. i. Part 8. New York, 1937.
J. D. Black. Ibid. Vol. i. Part 8. New York, 1937.
R. Blough. Ibid. Vol. i. Part 4. New York, 1937.
Brookings Institution. Institute of Economics, Publ. No. 56 :
M. Leven and others. Americans Capacity to Consume. Wasliington, 1934.
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Brookings Institution. Institute of Economics, Publ. No. 68 :
H. G. Moulton. Income and Economic Progress. Washington, 1935. (Pt IV
of the ‘Distribution of Wealth and Income’.)
Brookings Institution. Institute of Economics, Publ. No. 74:
M. Leven and C. Wright. The Income Structure of the United States.
Washington, 1938.
A. F. Burns. Quarterly Journal of Economics ^ May 1936. Review of the
Brookings ‘Inquiry into the Distribution of Wealth and Income’.
Journal of Political Economy^ October 1935. Review of the Brookings
‘Inquiry into the Distribution of Wealth and Income’.
T. N. Carver. The Distribution of Wealth. New York, 1925.
J, M. Clark. Studies in Income and Wealth.
G. Golm. Review of G. H. Simms, Personal Income Taxation', The Definition
of Income as a problem of fiscal policy, Chicago, 1938. Social Research, 1938.
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J. R. Commons. The Distribution of Wealth. New York, 1893.
M. A. Copeland. National wealth and income; an interpretation. Journal
of the American Statistical Association, June 1935.
Some problems in the theory of national income. Journ. of Polit.
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W. L. Crum. The national income and its distribution. Journ. Amer. Stat.
Assoc. March 1935.
R. R. Doane. The Measurement of American Wealth. New York, 1933.
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Wirtschqftstheorie der Gegenwart. 1928.
The Mature of Capital and Income. New York, 1912.
The role of capital in economic theory. Econ. Journ. 1897.
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U.S.A, Foreign and Domestic Commerce Bureau. Statistical Abstracts from
1923 onwards.
U.S. Treasury Department. U.S. Internal Revenue. Statistics of Income.
Washington, yearly since 1917 to date, figures from 1919.
See also G 8. Economist. Regular analysis of companies’ profits and losses.
C 7. H. J. H. Parker. Income of small shopkeepers, etc.
Japan
A 1^7, Charles V. Sale. Some statistics of Japan. Stat. Journ. 1911.
SUPPLEMENTARY BIBLIOGRAPHY
SELECT LIST OF REGENT CONTRIBUTIONS
United Kingdom
T. Barna. Valuation of stocks and the national income. Economica,
November 1942.
A. L, Bowley. National income in America and the United Kingdom.
Economica, August 1942.
Milton Gilbert, U.S, national income statistics. Econ. Joum. April 1943.
A. G. PiGOU. Comparisons of real income. Economica, May 1943.
E. G. Rhodes. The distribution of income. Economica, August 1942.
G. Findlay Shirras and L. Rostas. The Burden of British Taxation. National
Institute of Economic and Social Research; Economic and Social
Studies II, Cambridge, 1942,
H. W. Singer. The German War Economy, Manchester Statistical Society,
May 1943.
E. H- Stern. Public expenditure and the national income. Economica, May
1943 *
R. Stone, D. G. Champernowne and J. E. Meade. The precision of
national income estimates. Review of Economic Studies, Vol. dc, No. 2,
Summer 1942.
R. Stone. National Income in the United Kingdom and the United States of
America, Manchester Statistical Society, I942--43.
The national income, output and expenditure of the United States
of America 1929-1941. iSron. June/September 1942.
White Paper of the Financial Secretary to the Treasury. An Analysis of the
Sources of War Finance, and an Estimate of the National Income and Expenditure
in 1938, 1940 and 1941. (Cmd. 6347) 1942.
An Analysis of the Sources of War Finance, and an Estimate of the National
Income and Expenditure in 1938, 1940, 1941 and 1942. (Cmd. 6438)
1943-
United States
Harold Barger. Outlay and income in the United States of America
1921-1938. National Bureau of Economic Research; Studies in Income
and Wealth, Vol. 4. New York, 1942.
Marvin Hoffenberg with assistance from Mabel S. Lewis. Estimates of
National Output, Distributed Income, Consumer Spending, Saving, and Capital
Formation, Review of Economic Statistics, Cambridge, Mass. May
1943-
SiMON Kuznets. National Income and its Composition 19 19-*! 938. National
Bureau of Economic Research {2 vois.). New York, 1941.
The Conference on Research in Income and Wealth. Income size distribu-
tions in the United States. Parts I and II. National Bureau of Eco-
nomic Research; Studies in Income and Wealth, Vol. 5. New York,
1943 -
SUPPLEMENTARY BIBLIOGRAPHY 249
U.S.A, Department of Commerce:
Milton Gilbert and Dwight B. Yntema. National income exceeds
76 billion dollars in 1940. Survey of Current Business^ June 1941.
‘An economic review of 1941% subsection on ‘The national income’.
Survey of Current Business , February 1942.
Milton Gilbert. War expenditures and national production. Survey of
Current Business, March 1942.
Milton Gilbert and R. B. Bangs. Preliminary estimates of gross national
product, 1929-41. Survey of Current Business, May 1942.
Milton Gilbert and George Jaszi. National income and national
product in 1942. Survey of Current Business, March 1943.
George Jaszi. National product and income in the first half of 1943.
Survey of Current Business, August 1943.
Index
A Comparison of the Wealth and National
Income of Several Important Nations
before and after the War^ 1925, Con-
rado Gini, 41
A Critique of Russian Statistics, 1939, Colin
Clark, 42
Advertisement, 5, 19, 24-44, 48
Aerated waters, excise, 167, 170 seq.;
see also Drink
Age-distribution of occupied popula-
tion, 54-60
Agricultural Register, 46
Agriculture, 67, 70, 95-101, no, 122,
127-8, 132, 135, 153, 194-7
Allotments, see Gardens
Artificial silk, customs and excise, 166,
170 seq.; see also Textile industry
Austria, taxation, 9
Banking, 71, 86-90, 93, 196; see also
Commerce
Baudouin, F., 37
B.B.C., 47
Belgium, customs and excise, 8; National
income, 37
Board of Inland Revenue, 85; see also
U.K. Official Publications
Board of Trade, 85, 140, 151-3, 192;
see also Index numbers, U.K.
Official Publications
Booker, M. S., 72, 94
Boot and shoe industry, 62-3, 67, 151,
159, 174-7; see also Clothing in-
dustry
Bowley, A. L., 2, 7-9, 11-17, 19, 21-2,
24-5, 48, 57, 61, 66, 77, 83, 92, 94,
98, 1 30-1, 154
Bread making, 1 59, 1 74-9; see also Food
Brewing, excise, 67, 170 seq.; see also
Drink
Brick industry, 62-3, 67, 104, 107-8,
157
British Income and Property, Lord Stamp,
3, 12
Building industry, 67, 71, 103-4, ^06-9,
122-3, I55 j I57j
168, 174-8
Building materials industry, 124, 126,
146-50, 157, 161, 164, 174-7; see
also Brick industry
Building subsidy, 146, 173
Bulletin d^irformation et de documentation,
banc national de Belgique, 37
Bulletin de Vinstitut de recherches econo--
miques, 37
Bulletin de Vinstitut International de Statist
tique, 2, 3, 34
Campion, H., 20, 49, 50, 76, 84, 94-5
Canada, national income, 23, 32-3;
taxation, 8, 10
Canada Tear Book, 32
Carman Edwin, 2, 27
Capital Consumption and Adjustment, S. Fa-
bricant, 2
Capital goods, 5, 18, 19, 24-44, 48; see
also Services of durable goods
Census of Agriculture, 46, 99, 135; see
also U.K. Official Publications,
Ministry of Agriculture
Census of Production, 9, 61, 85, 95,
97-9, 101-13, 122 seq,, 157 seq.
Central Statistical Office, 83
Cha?iging Inventory Valuations in Studies in
Income and Wealth, S. Kuznets, 3
Charities, see Corporate bodies
Chemical industry, 67, 70, 104-8, 123,
124, 126, 142, 147-50, 158, 161,
164, 166, 169, 171, 173, 176-7
Churches, see Corporate bodies
Clark, Colin, 2, 9, 10, 14-16, 19-23,
26, 36, 42, 1 15, 119-20, 189-92
Clay, see Building materials
Clothing, national expenditure on, 21,
53; see also Services of durable
goods
Clothing industry, 67, 70, 104, 106-8,
124, 126, 142, 147-5L 159? 162,
164, 176-7; see also Tailoring
Coal mining, 62-3, 70, 103-8, 123-6,
153? ^55? 157? 161, 164, 175;
subsidy, 45, 166, 168-9; see also
Mining
Coates, W. H., 2, 15, 30
Cocoa, customs, 166, 171 seq.; see also
Drink
Commerce, 105, no, 112, 135, 153,
196; see also Banking
Commodity Flow and Capital Formation,
S. Kuznets, 3, 16
Concepts of National Income, Studies in
Income and Wealth, M, A. Cope-
land, 2
Consumption goods, 5, 18, 19, 24-44,
48
Copeland, M. A., 2, 9, 15-17, 26-7
INDEX
Corporate bodies, 6, 20, 24-44, 49? 50?
8i~4
Cost of living, 5; local differences, 17,
26-31, 48; see also Index numbers
Cotton industry, 62-3, 70, 104, 158,
175; see also Textile industry
Crawford, G., 36
Curtis, Myra, 20
Customs duties, see Import duties
Dalton, H., 12
Das Volkseinkommen Oesterreichs und Un-
garnSi 1917, F. v. Fellner, 40
Death duties, 15
de Bernonville, Duge, 39
Defence services, 71, 122, 133, 135, 161;
see also Services
Depreciation, 5, 19, 23-44, 4^-9? 53?
129-32, 187 seq.
Destruction, of irreplaceable goods, 5,17,
24-44, 48
Devons, E., 142 seq.
Die Wirtschqftstkeorie der Gegenwart, I.
Fisher, 2
Distribution, of incomes, 1x3-19; of
national expenditure, 6, 20- r, 24-
44? 5^>? 53? of national income, 3, 6,
21-2, 24-44, 50-1
Distributive trades, 67, 71, 75-8, 86-90,
93? 96? 109, 112, 129, 196; see also
Shop assistants
Domestic services, 69, no, 130, 196;
see also Services
Dominion Bureau of Statistics (Canada),
32
Drink industry, 70, 104, 107-8, 125-6,
142, 146-50, 157, 159, 164, 175-7;
see also Food
Dyeing industry, 70, 161-2; see also
Chemical industry
Earners, numbers of, 10 r, 113; see
also Occupied persons. Wage-
earners
Earning strength, 57-60
Earnings, 21, 61-3, 66, 70, 81, 88,
153 seq.; see also Index numbers
Earth products, see Mineral products
Economic Journal^ 2, 12, 13, 20, 47, 131,
134, 151, 153
Economic Review^ 35
Economic Review (Kyoto University),
34
Economica f X2i, 190
Economics of Industry^ Alfred Marshall,
Education, see Services, public
Eire, see Irish Free State
Electrical engineering industry, 70, 158,
176-7
251
Electricity supply, 71, 103, 125-6, 151,
160, 164-5; see also Public Utility
Works
Elsas, M. J., I
Employers, 70-1, 79
Engineering industry, 67, 70, 103-4,
107-8, 122, 124, 126, 142, 147-50,
158, 1 60-1, 164, 174-7
Entertainments, 71, 102, 105
Entertainments Duty, 169
Excise duties, 4, 8, 9, 24-45, 123,
128, 130, 132-3, 146, 165 seq.,
182 seq.
Export Credit Guarantees, 169
Exports, value of, 128-9, 197
Fabricant, S., 2, 27
Farm crops, income from, 97
Farm products, consumed by family, 4,
14, 24-44, 46
Farmers^ income, 98-9
Feavearyear, A. E., 20, 134
Feeding stuffs, cost of, 97, 99, 100
Fellmongery, 138, 159; see also Leather
Fellner, F. v., 2, 9-1 1, 16, 20, 27, 40
Fertilizers, cost of, 97, 99, too
Finance, see Banking, Commerce
Fisher, Irving, 2, 10, 16, 27, 136, 181
Fishing, 70, 105, 109, 127, 135
Flux, A. W., 3, 16, 32, 49, 127-9, 132-6,
196
Food, Health and Income, Sir John Orr,
118
Food, national expenditure on, 21, 53
Food industry, 67, 70, 102, 104, 106^,
123, 125-6, 142, 146-50, 157, 159,
164, 171, 175-7
Foreign investments, 3, 8, 24-45, 129,
132
Foreign possessions, 3, 8, 24-45
Foreigners, income of, 3, 8, 24-45, 52,
81, 83-4, 134, 190
Forestry, see Agriculture
France, national income, 38-9; taxa-
tion, 9, 16
Frankel, S. Herbert, 43, 56
Furniture, see Services of durable goods.
Wood trades
Gardens, produce of, 4, 14, 24-44, 46,
127
Gas supply, 71,1 08-9, 1 25-6, 1 5 1 , x 60,
164-5, 17^7; see also Public Utility
Works
Germany, national income, 23, 33-4;
taxation, 8-10, 14-17
Giffen, Sir Robert, 50
Gifts, from abroad, 4, 15, 24-44, 47;
within the country, 4, 15, 24-44,
47
INDEX
252
GinijC., 3, II, 16,28,41
Glass industry, 108, 157; see also Pottery
Govemmeiit debt, 4, 8, 15, 24-44, 47 j
52,81-4, 188 seq.
Government employment, 71, ob, 90,
93, 102, 105-12, i30j
176-7; see also Public administra-
tiLon
Government expenditure, 4, 5, 6, 9,
' I9> 20, 24-44, 47 j 49? 53
Government production, 122-3, 125-0,
132, 134? 157? 160-5, 176-7?
182 seq.
Government Publications, see U .iv.
Official Publications
Greece, national income, 39
Guillebaud, C. W., 47
Health services, see Services, public
Hicks, J. R., 3? 30? 190
Hotel services, 130, 196; see also Per-
sonal services
Houses, 132, 196-9; see also Services of
houses
Huber, Michel, 38-9
Hungary, national income, 411
II reddito privato degli Italiani, nel 1928,
Leonardo Meliadd, 41
Import duties, 4, 8, 9, 24-45? i^3? 128,
130, 132, 133? 165 seq., 182 seq.
Import Duties Act Inquiry, 151
Imports, materials for agriculture, 128;
materials for industry, 128; value
of, 128, 132, 197
Income, actual, 21, 45, 51? ^4? °i'"4;
aggregate, 8, 15, 21, 45? 5C>-i? 63,
130; assessable, 51; disposable, 8,
2 1 ; earned and unearned, 8, 2 1 , 81 ,
84; gross, 6, 21-44, 51? 57? ^2,
189 seq.; individual and corporate,
8, 21, 132, 181; net, 6, 22-44, 52;
real, 6, 7, 23-44? 130? 172, 180-200;
soci^, 8, 15, 21, 38, 83, 190;
taxable, 8, 21, 51
Income in Hnd, 5, 16, 24-44, 47
Income of the People of Ike United States,
National Bureau of Economic
Research, 22
Income tax, 44-53? 64-7? 76-85, 95-6,
nS-iS
Incomes, numbers of, 1 12-19
Index numbers, Board of Trade, 140,
152? 192 seq.; cost of living, 23,
192 seq.; earnings, 63; economic
service, 146; efficiency, 141, 146,
148, 150-1; employment, 152-3;
money income, 192 seq.; national
wage bai, 58-9, 65; output, 146;
prices, 23, 139, 140, 146-50, 180-
200; production, value, 146-50;
production, volume, 136, 146-53,
192; quantity of national income,
192 seq.; real income, 180-200;
salary rates, 92-3; Statist, 140, 146;
wage rates, 58-64, 92, 154? 192 seq.
India, customs and excise, 8; Depart-
ment of Agricultural Statistics, 5;
national income, 37-8; produce of
farms, 14
Inequality of Incomes, H. Dalton, 1 2
Insurance, 5, 8, 16, 24-44, 52, 82-3,
134
Insured persons, numbers, loi, 1 10-15,
152; see also Index numbers
Irish Free State, customs and excise, 8,
172; national income, 14, 40
Iron and steel industry, 62-3, 70, 124,
126, 137, 142? 147^50? ^58? 164,
177
Italy, national income, 40, 41; taxa-
tion, 9
Japan, national income, 34? taxation,
Journal of the Royal Statistical Society, 3,
21, 61, 84, 97, 128-9, 136, 153
Juveniles, wages of, 66 seq.
Kendall, M. G., 97-9
Kieman, T. I., 40
King, W. I., 10, 14, 22-3, 44, 53
Knibbs, G. H., 36
Kuznets, S., 3, 9? ^^3? 28-9, 36,
53? 119-20
La population de la France pendant la game
avec un appendice sur les revenus prices
avant et aprks la guerre, Michel Huber,
38
La Richesse de la Ftanoe, 1916, Rene
Pupin, 39
Laspeyre^s index, 139
Laimdring, 1 12, 161-2; also Personal
services
Leak, H., 3, 128
Leather industry, 70, 104, io6~8, 124,
126, 138-9? 142? 147? 150? ^59? 162,
164, 175-7
Lehfeldt, R. A., 43
licence EKities, 169
Lindahl, E., 3, 8-ii, 14-17? ^9? 20, 23,
29? 30? 42
Livestock, income from, 97
Local Authorities, 89, 93, 106-9, 122-3,
125-6, 132-3, 151? 163-5, 168; see
also Government
Lodgers, 5, 12, 16, 24-44, 47? 96
London and Cambridge Economic Ser-
vice, 60, 61, 141, I5I--3? J^93> 197
INDEX
Maizels, A., 151
Managers, 70-1, 79
Manchester Statistical Society, 2, 182.
188
Manual labour, 75
Manufacturing industry, 70-1, 86-90,
92, 104, 122, 132, 194-5;
individual industries
Marley, Joan G., 84, 94
Marshall, Alfred, 3 j 9? 185
Match industry, excise, 169, 1 73; see also
Chemical industry
Matolcsy, M., 3, 9, 10, ii, 16, i7s 31
Measurement of Social Phenomena, A. L.
Bowley, ii, 14, 24
Meliadd, Leonardo, 41
Metal industry, 67, 70, 104, 106-8,
123-4, ia6, 142-3, 147-50, 158,
164, 176-7; see also Iron and steel
Metron, 39, 41
Mineral products industry, 70, 103, 106,
108
Mining industry, 70, 104, 106-8, 122,
124, 126, 132, 142, 147-50, 157,
164, 176-7; see also Coal mining
Ministry of Agriculture, 95; see also
U.K. Official Publications
Ministry of Labour, 61, 67, 69, 73, 88,
154, 157; see also U,K. Official
Publications
Mitchell, W. C., 3, 10, ii, 16, 19, 23, 29
Mori, K„ 3, 10, 30, 34
Mori, P., 43
Motor Vehicle Duties, 169
Municipalities, see Corporate bodies
National Bureau of Economic Research
(U.S.A.), 2, 3, 22, 44
National debt, see Government debt
National dividend, 131
National Health Insurance, numbers
covered, 101-13, 117
National Income, 1924-31, Colin Clark, 2
National Income, 1929-32, S. Kuznets,
21
National Income and Capital Formation,
I 9 i 9 -’t 935 j S. Kuznets, 3
National Income and Outlqy, Colin Clark,
2, 21-2, 1 15, 119, 120
National Income in the United States, 1929-
1935, U.S.A. Department of Com-
merce, 3
National Income of Australia, Colin Clark
and G. Grawford, 36
National Income of New Zealand, 1937,
F, B. Stephens, 35
National Income of Sweden, 1861-1930,
E. Lindahl, 3, 7, xp, 42
Nalionctl Income ^ the Irish Free State,
T. I, Kieman, 40
253
National Institute of Economic and
Social Research, 85
Neumark, S. D., 43
New South Wales, national income, 41 ;
taxation, 17
New South Wales Official Tear Book,
New Survey of London Life and Labour, 68,
114
New Zealand, Dominion of New Z^oland
Populaiion Census, 1926, 35; national
income, 35, 53; taxation, 10, 17
New Official Tear Book, 35
Non-manual workers, see Salaried
workers
Nursing services, 71, 133, 138; see also
Services
Occupied persons, 54seq-, lOi seq.,
117-18, 135, 198
OflScial Publications, see U.K. Official
Publications
Orr, Sir John, 118-19
Output, gross, 49 seq., 127, 137 seq.;
net, 45, 52, 122-9, 137 seq.,
162 seq., 197; see also Small
firms
Outworkers, 109, 175-9
Paasche’s index, 139
Paints, see Chemical industry
Paper, 67, 71, 104, 104-8, 123, 125-
6, 142, 147-50, 160, 162, 164,
176-7
Pareto’s Law, 22, 1 15-19
Patent medicines, excise, 169, 173; see
also Chemical industry
Pensions, 4, 5, 8, 16, 21, 24-44, 47, 52,
8i— 1 18 seq.
Personal services, 71, 86-90, 93, no,
135, 153; see also Services
Petroleum, customs, 166, 169, 171 seq.;
see also Chemical industry
Pigou, A. C., 3, 10, 15, 17, 31, 32
Poland, national income, 14
Police services, 71, 133, 135; see also
Government employment; Services,
public
Population Census, 54, 68-76, 95-6, 98,
loi seq., 1 14, 117-18, 133, 135,
156; Northern Ireland, 55, 68,
loi seq., 1 1 7
Pottery industry, 62-3, 70, 104, 107-8,
157
Precioxis metal industry, 70, 124, 143,
158, 176-7
Price movfflments, 6, 23, 24-44, 180 seq.;
see also Index numbers
Principles af Economics, Alfred Marshall,
3, 9, 131, 185
INDEX
254
Printing, 67, 71, 104, 106-8, 125-6,
142, 147-50, 160, 162, 164, 167,
170-7
Production, volume of, 136 seq.
Professions, 71, 86-90, 93, 102, 105,
no, 1 12, 130, 135, 196; see also
Services
Profits, 52; undistributed, 5, 17, 24-44,
47? 52> 1 19? 132
Public administration, 70-1, 86-90, 93;
see also Government employment
Public and Private Property in Great Britain,
1935, H. Campion, 20, 49
Public Utility Works, 102-3,
1 57; see also Electricity, Gas, Water
Pupin, Rene, 39
Qmrterly Journal of Economics, 7, 22,
116
Railways, 62-3, 70, 107, 109, 122, 160;
see also Transport
Ramsbottom, E. G., 61, 62
Rao, V. K. R. V., 13, 37
Rates on house property, 4, 5, 8, 24-44,
53
Rationing, 4, 24-44
Rediades, Pericles D., 39
Registrar-GeneraPs estimates, 54, 55;
see also U.K. Official Publications
Rent, agricultural, 97-8
Rents, 52-3; see also Services of houses
Repair work, 1 74
Reparations, 8, 33
Revue d^e'conomie politique, 39
Rhodes, E. G., 141 seq., 197
Road fund subsidy, 45, 47, 167-9
Royal Statistical Society, 54, 61; see
also Journal of the Royal Statistical
Society
Rubber industry, 71, 125-6, 160, 162,
164, 176-7
Saddlery industry, 138; see also Leather
industry
Sailors, income of, 8
Salaried workers, 68, 79, 85-91
Salaries, 52, 68, 74-5, 79, 80, 84-
95
Savings, 5, 21, 24-44, 48, 53, 134,
187 seq.
Savings certificates, 81, 84
Scotland, Department of Agriculture,
101
Seeds, cost of, 97, 99, 100
Selling value, 128^, 132
Services, 5, 24-44, 129, 132, 192; do-
mestic, 4, 11-13, 24-44, 46, 53;
see also Domestic services; of durable
goods, 4, 10, 24-44, 46; of houses.
4, 10, 24-44, 46; see also Houses;
professional, 4, 7, 24-44;
Professions; public, 4, 9, 24-46,
182 seq.; see also Government; to
oneself or family, 4, 11-13, 24-44,
46,54
Shiomi, S., 34
Shipbuilding industry, 70, 104, 124,
126, 142, 147-50, 158, 164
Shipping services, 8, 29
Shop assistants, 68-9, 75-9, 75-84, 91-
2; see also Distributive trades
Silk, customs and excise, 165, 171; see
also Textile industry
Small firms, net output of, 127, 174-9
Societies, see Corporate bodies
Soldiers, income of, 8
Sources of national income, 3, 6, 21-2,
24-44, 48, 50, 52
South African Journal of Economics ( The ) ,
Spain, national income, 41
Spirits, excise, 167, 169, 170, 173; see
also Drink
Stamp, Lord, 2, 3, 8, 9, ii, 12, 14-17?
20, 21, 23, 25, 50, 66, 83, 98, 132-3,
139
Stamp, Sir Josiah, see Stamp, Lord
Standard Time Rates and Hours of Labour,
1929, 66
State services, see Services, public
Stationery trades, 71, 160; see also
Paper
Statist, 140, 146
Statistical Tear Book for Hungary, 40
Statistik und Volkswirtschaft, 43
Statistisches Jahrhuch fur das Deutsche
Rekk, 33
Statistischei> Reichsamt, 34
Stephens, F. B., 35
Stocks, money value of, 5, 1 6, 1 7, 24-44,
48, 1 19-21, 131-2
Stocks and shares, changes in value of,
4, 9, 24-44, 46
Stone, R., 151-3
Subsidies, 4, 9, 24-45, 123, 146, 165 seq.,
182 seq.
Sugar, subsidy and duties, 45, 166,
168 seq.; see also Food
Super tax, 115
Surtax, 113-14
Sweden, national income, 1 1, 42
Switzerland, national income, 42-3
Tailoring, 159, 175-7; see also Clothing
industry
Tanning industry, 138, 159; see also
Leather
Tax System of the World, 5th ed. 1934,
8
INDEX
Taxation, 4, 5, 8, 16, 19-21, 24-47,
52-3, 134, i6g, 182 seq., see also
Death duties. Excise duties, Im-
port duties, Income tax, U.K.
Official Publications
Teaching, 71, 86-90, 93, 103, 133, 135
‘Terms of trade’, 187, 195
Textile industry, 67, 70, 103-4, 106-8,
122, 124, 126, 142, 147-5O5
161-2, 164, 171, 175-7
The Change in the Distribution of the
National Income^ 1880-1930, A. L.
Bowley, 2
The Citizen's Purse, W. H. Coates, 2
The Conditions of Economic Progress, Colin
Clark, 14
The Division of the Product of Industry,
A. L. Bowley, 2, 48
The^conomics of Welfare, A. C. Pigou, 3
The Income of the United States, its amount
and Distribution, 1909-19, National
Bureau of Economic Research, 22
The National Income, 1924, A. L. Bowley
and Sir Josiah Stamp, 2, 8, 21,
66, 83, 98, 130
The National Income and its Purchasing
Power, W. I, King, 10, 44
The National Income of British India,
V. K. R. V. Rao, 13
The National Income of Hungary, 1924/25-
1936/37, M. Matolcsy and St
Varga, 3
The National Resources of South Africa,
1922, R. A. Lehfeldt, 43
The Nature of Capital and Income, I . Fisher.
2
The Private Wealth of Australia and its
Growth, G. H. Kmibbs, 36
The Wealth and Income of the People of the
United States, 1915, W. I. King, 22,
44
Timber trades, 123, 125-6, 142, 147-
50, 1 60-1, 164, 174-7; see also
Wood
^Tobacco industry, 70, 104, 107-8,
125-6, 142, 146-50, 157, 160, 164,
167, 170-2, 176-7; see also Food
Trade Facilities Act, 1921, 169
Transfers, 81, 83, 182 seq.; see also
Gifts, Pensions, Taxation, etc.
Transport services, 67, 71, 86-90, 93,
105-9, 1 12, 122, 125-6, 129,
130, 135, 153, 160, 164, 176-7,
196
Travel, national expenditure on, 53
Unemployed, 58, 68, 73, 79, 102, 104-5,
135-6
Unemployment insurance, numbers
covered, 1 01-13
255
Union of South Africa, national income,
.43
University of Manchester Economic
Research Section, 85, 88
Unoccupied persons, 79, 135
U.K. Official Publications:
Abstract of Labour Statistics, 55, 61; see
also Ministry of Labour
Agricultural Statistics, 44, 95-6, loi;
see also Census of Agriculture,
Ministry of Agriculture
An Analysis of the Sources of War Finance
and Estimate of the National Income
and Expenditure in 1938 and 1940,
73> 62-4; ditto for 1941, 53,
121
Censuses of Production, Reports, 9,
44-53, 122-79, 196, 197; ^Iso
Census of Production
Charity Commissioners, Reports, 50
Committee on National Expenditure,
Report, 90
Finance Accounts of the United Kingdom,
45, 165 seq.
Inland Revenue, Reports of Com-
missioners, 22, 44-53? 65, 95, 1 13;
see also Taxation
Ministry of Labour Gazette, 62, 66, 69,
102-3, ^52; see also Ministry of
Labour
Population Census, Reports, see Popu-
lation Census
Registrar-General’s Reports, 55, 56;
see also Registrar-General
Royal Commission on the Civil
Service, Report, 90
University Grants Committee, Re-
ports, 50
U.S.A., national income, 22-3, 36, 44;
taxation, 9, 10
U.S,A. Department of Commerce, 3
U.S.S.R., national income, 7, 42
UN.S.R. Handbook, 42
Value and Capital, J. R. Hicks, 3
Vandellos, Jose, A., 41
Varga, St, 3, 9, 10, ii, 16, 17, 31
Vegetables, see Gardens
Vehicle industry, 70, 104, 106-8, 124,
126, 142, 147~5^? 156? 163-4, 174-7
Verijn-Stuart, G. A., 3, 10, ii, 15, 28
Wage-bill, national, 52, 56, 59-74? 156
Wage-census, 61-2, 65-6, 114, 154
Wage-earners, 56-60, 68, 79-81, 84,
1 55-6; see also Occupied persons
Wage rates, 153 seq.; of juveniles, 67-8;
see also Index numbers
Wages, 21, 58, 81-4; in agriculture, 99,
100; of juveniles, 66 seq.
INDEX
256
Wages and Income in the United Kingdom
since i860, A. L. Bowley, 57 >
71. 77 . 154
Wagner, A., 3, 17. 32
War loans, see Government debts
Waste products, 127, 129, 132
Watch and dock trade, 158, 174; see
also Metal industry
Water supply, 71. ^<> 3 .
164; see also Public Utility
Works
Wealthy Edwin Carman, 2
Wirtschaft md Statistik, 33, 34
Wood trades, 67, 71, 102-4. 106-8, 160,
162, 174-7; see also Timber
Wool industry, 62-35 70> 104, 159, 178;
see also Textile industry
Workers, see Occupied persons, Wage-
earners
Workers on own account, 68, 79, 80,
88, 117, 132. 134
Zeitschrift fur Schweiz- Statistik md
Volkswirtsckafti 1926, 43
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